As Los Angeles-area residents continue their recovery from one of the costliest natural disasters in U.S. history, California’s insurer of last resort is heading towards another hot and dry summer with its financial resources already under pressure. This raises the possibility that state residents may need to contribute to further funding.
The California FAIR Plan, which assists those who can’t get insurance through the standard market, recently ordered member companies, like State Farm, Allstate Corp., and Chubb Ltd., to collectively provide $1 billion to improve its reserves. This move, known as an assessment, provided a rare look into the program’s finances, which are not always public.
One crucial finding: With only three months passed in 2025, there is limited surplus cash available should another disaster occur this year. And wildfires in California are a year-round concern.
State Farm received provisional approval this month for a 22% emergency rate hike after warning that massive payouts in the Los Angeles area could destabilize its finances and the wider market.
