The devastating wildfires that have torn through the Los Angeles metropolitan area and surrounding regions since January 7, with four of them still active, should make us think about our future in a world that is getting hotter, and where such catastrophes will be more and more difficult to control. As of Wednesday, the fires, the worst in US history, have already caused at least 25 deaths, forced the evacuation of more than 200,000 people, and destroyed or damaged more than 12,400 homes and premises.
The political blame game being played out over the failure to manage the fires is a meaningless exercise. We know that the fires have been exacerbated by drought, low humidity, vegetation buildup and hurricane-force Santa Ana winds, which in some places have reached 100 mph, but the simple truth is that no matter the size of the Los Angeles fire department’s budget and resources, no city on Earth is ready for the consequences of our climate emergency. Obviously, the timber-frame construction widely used in the United States (a result of its history and, in the case of California, by how complex and expensive it is to build with brick in a seismic zone) meant the damage was more intense, but any city built near to forests is just as vulnerable.
Therefore, one of the key challenges we now face is how to creating some sense of security in a world in which threats of this type are becoming more frequent and more intense. When natural disasters occur, those affected should be able to expect protection, for example, having our assets covered by insurance.
At the end of last year California enacted legislation requiring insurers to resume the fire coverage, including in high-risk areas, they had withdrawn from homeowners, although it allows them, with some limits, to pass on the cost. Given that the new rule went into effect only a few days ago, many of the people who have lost their homes will not have been covered, and that applies not only to the millionaires with ocean-front homes in Malibu, but also to thousands of properties in middle-class areas, whose owners now face ruin.
The California insurance market is now at crisis point: the climate is changing very rapidly, but we are still in denial and refusing take action to mitigate its effects. Last year was the hottest in history, with the planet exceeding 1.5°C average warming for the first time, but people are still building and living in some of the highest risk areas as the perils increase. That risk factor, which insurance is supposed to pass on through higher prices, leads to markets where home insurance is a luxury that many people can’t afford, thus worsening inequality.
That gap between the rising cost of risk and what insurers can charge has been growing after the devastating wildfires of 2017 and 2018, when private insurers lost decades of profits and began to consider pulling out of the state. Many homeowners then migrated to the state-managed FAIR Plan, which is more expensive and provides less coverage than commercial plans. If the FAIR Plan does not have the money to pay out all claims, it collects money from insurance companies that operate in California. In 2020, FAIR had an overall market share of 2.5%, but 20.4% in areas considered high-risk. But since 2020, FAIR’s policies have grown by more than 41%.
The insurance industry finds itself in a slow-motion train wreck. But when most people can no longer afford insurance, we have lost one of the things that characterize us as a civilization: the ability to provide a safety net. But the reason we now find ourselves in this mess is because we have chosen to ignore the science; we have denied the climate emergency. And it’s not just California, it’s many more places in the world, from flooding in Spain to fires in Australia.
The incoming US president is a climate change denier, and in Germany, the AfD wants to tear down the country’s wind turbines. Next time you hear a denialist ridiculing the climate emergency and talking about warmists, think about what is at stake.
UPDATE (02/12/2025): FAIR has run out of money…
(En español, aquí)
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This post was previously published on MEDIUM.COM.
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