The recent Eaton and Palisades fires in the greater Los Angeles area are evidence of the increasingly prevalent wildfire risk in California. These wildfires have caused historic damage, claimed lives, and threatened communities. As stories of resilience and courage emerge and the fires are contained, agents and brokers provide critical insurance support for policyholders. In addition to helping with remediation and claims efforts, there are larger opportunities to help foster resilience in local communities in the face of increasing wildfire risk.
The Growing Wildfire Risk in California
Wildfires have increased in frequency, severity, and size — and much of California is at risk. Prolonged droughts, strong winds, and rising temperatures have contributed to some of the heightened risk and make wildfires a year-round exposure. For agents serving this challenging market, this means developing a deep understanding of risk and proactive mitigation strategies to assist policyholders before, during, and after a wildfire.
Some of the ways agents and brokers can help policyholders include:
Bridging the Insurance Gap
A significant issue challenging residents and business owners in high wildfire-risk areas is underinsurance. When consumers do not carry sufficient insurance coverage, everyone is at risk. Agents are critical in educating policyholders to help close the coverage gap and ensure those at high risk have sufficient insurance protection.
Here are some steps to bridging the insurance gap:
Conduct regular policy reviews to ensure coverage aligns with the current rebuilding costs and property values.
Discuss the importance of coverage like ALE (additional living expenses) so policyholders understand why they need this coverage and how much they may need based on their circumstances.
Recommend endorsements, like extended replacement cost coverage, that help provide funds for rebuilding costs that exceed policy limits.
Proactively promote access to the FAIR plan to policyholders in high-risk areas that struggle to find coverage in the standard market.
Managing a Complicated Regulatory Environment
California has complex insurance regulations and changing wildfire-related legislation makes managing insurance in the state even more challenging. To be successful, agents must stay on top of dynamic conditions and educate policyholders about regulation changes, like non-renewal protection, transparency requirements, and wildfire mitigation discounts.
Building resilience in local communities is another way Californians can be proactive when facing changing regulations and increasing wildfire risk. Home hardening efforts and other resiliency programs can help reduce the frequency and severity of losses and agents can support these types of programs by providing information to policyholders.
Providing Proactive Claims Support and Management
Many policyholders rely on their agents for guidance and support throughout the claims process — and an increase in wildfires is likely to result in more claims. A best practice is to adopt a proactive claims management approach by:
Educate policyholders on the importance of preparing before a disaster strikes. Documenting personal property with videos, pictures, and receipts is a way policyholders can be proactive about pre-disaster planning. Agents can provide policyholders with inventory lists and checklists to help them document their property.
Agents can work closely with the insurers they partner with to understand their digital portals and claims processes. Insurers that offer seamless digital claims submissions, communications, and updates can improve efficiency and customer satisfaction. Agents can help their insureds understand these workflows and digital tools.
Provide clear expectations on claims-related timelines and processes. Be honest and transparent about policy terms, conditions, and exclusions.
Be an advocate for policyholders with insurers when needed, helping to resolve miscommunications and assisting the policyholder with gathering documents or connecting with the insurer.
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External Links:
https://www.fire.ca.gov/incidents/2025/1/7/palisades-fire
https://www.insurance.ca.gov/01-consumers/105-type/95-guides/03-res/upload/FAQ-Safer-from-Wildfire-Regulation.pdf
