California's New Insurance Commissioner Proposes Government-Run Wildfire Program
California's new insurance commissioner, Jane Kim, has introduced a plan to create a government-run wildfire insurance program aimed at addressing the state's growing home insurance crisis.
Former San Francisco Supervisor Jane Kim has proposed a government-run wildfire insurance program as a solution to California’s home insurance crisis, which has been exacerbated by a series of catastrophic wildfires, including the Jan. 7, 2025, firestorms that destroyed or damaged over 16,000 structures in the Pacific Palisades and Altadena areas. The plan, known as Natural Disaster Insurance for All, seeks to make home insurance more affordable and increase its availability by removing the profit motive from the system, eliminating high executive salaries, and focusing on reducing wildfire risks (ID:1). [1]
Kim’s plan follows a similar proposal outlined in a natural catastrophe resilience study commissioned by Gov. Gavin Newsom in response to climate change and recent wildfires. The proposal would not be the first state-operated insurance program in California; the California Earthquake Authority was established in 1996 after the 1994 Northridge earthquake. However, the new plan has raised concerns among insurance industry officials and consumer advocates, who note that issues such as startup financing and claims handling remain unresolved (ID:1). [1]
The plan would require commercial carriers to sell coverage for perils such as water damage, wind, theft, liability, and ordinary house fires, but not for damage caused by large wildfires. Instead, wildfire coverage would be mandatory, with the state program holding the risk and funding claims. Premiums would be split between individual fire risk and rebuild costs, with a small capped fee to build capital for bad wildfire seasons. The plan would cover all existing homes, with eligibility for new homes to be explored based on their wildfire risk (ID:1). [1]
Key challenges remain, including how to raise an estimated $25 billion for startup capital and whether the state plan would handle claims itself or rely on existing carriers. Experts have highlighted the need for the state to contract with a large number of adjusters to be ready for catastrophes, as well as the potential for high premiums or deductibles if reinsurance is used to fund the program. Kim acknowledges that her plan is a starting point and will require further negotiations with legislative leaders, consumer advocates, and other stakeholders to determine its final form (ID:1). [1]
Advertisement
Former San Francisco Supervisor Jane Kim has proposed a government-run wildfire insurance program as a solution to California’s home insurance crisis, which has been exacerbated by a series of catastrophic wildfires, including the Jan. 7, 2025, firestorms that damaged or destroyed more than 16,000 structures in the Pacific Palisades and Altadena areas alone (Source ID: 1). These wildfires have caused insurers to drop policyholders in fire-prone areas while raising rates, though statewide they remain near the nationwide average depending on the study. The state’s privately operated insurer of last resort, the California FAIR Plan, has seen residential policies more than double to 677,000 since 2022 even as it surcharged residential policyholders statewide to help pay for $4 billion in January 2025 losses (Source ID: 1). [1]
Kim’s plan, known as the Natural Disaster Insurance for All proposal, aims to make home insurance more affordable and increase its availability by removing the profit motive from the system (Source ID: 1). The plan would require commercial carriers to sell coverage for perils such as water damage, wind, theft, liability, and ordinary house fires, but not for damage caused by large wildfires (Source ID: 1). This approach is not unique, as a similar plan was briefly outlined as an option in a natural catastrophe resilience study ordered by Gov. Gavin Newsom this year in response to climate change and the Palisades and Eaton wildfires (Source ID: 1). [1]
The plan envisions commercial carriers continuing to sell coverage for perils such as water damage, wind, theft, liability, and ordinary house fires, but no longer covering damage caused by large wildfires, though they would sell those policies on behalf of the new state plan (Source ID: 1). Wildfire coverage would be mandatory, with the state program holding the risk and funding claims (Source ID: 1). Premiums would be split between an amount covering a home’s individual fire risk and rebuild costs, and a small capped fee to build capital in the case of a bad wildfire season, such as in 2025 (Source ID: 1). [1]
Former San Francisco Supervisor Jane Kim has proposed a government-run wildfire insurance program as a solution to California’s home insurance crisis, which has been exacerbated by a series of catastrophic wildfires, including the Jan. 7, 2025, firestorms that damaged or destroyed more than 16,000 structures in the Pacific Palisades and Altadena areas alone (Source ID: 1). The wildfires have led to insurers dropping policyholders in fire-prone areas while raising rates, though statewide they remain near the nationwide average depending on the study. As a consequence, the state’s privately operated insurer of last resort, the California FAIR Plan, has seen residential policies more than double to 677,000 since 2022 even as it surcharged residential policyholders statewide to help pay for $4 billion in January 2025 losses. [1]
Advertisement
Kim’s plan, known as the Natural Disaster Insurance for All proposal, aims to make home insurance more affordable and increase its availability by removing the profit motive from the system (Source ID: 1). The plan envisions commercial carriers continuing to sell coverage for perils such as water damage, wind, theft, liability, and ordinary house fires, but no longer covering damage caused by large wildfires, though they would sell those policies on behalf of the new state plan. Wildfire coverage would be mandatory, with the state program holding the risk and funding claims. [1]
The plan would cover all existing homes, with eligibility for new homes to be explored based on their wildfire risk and how much of that is mitigated. Left to be determined is whether wildfire claims would be handled by carriers who insure a homeowner’s other perils, or whether the plan would hire and manage its own adjusters (Source ID: 1). Following the 2025 wildfires, claims management has risen to be a top issue. The Department of Insurance and Los Angeles County are investigating multiple home insurers, including State Farm General, the state’s largest, over how they handled claims, following policyholder complaints of delays, underpayment and denials. [1]
Former San Francisco Supervisor Jane Kim has proposed a government-run wildfire insurance program as a solution to California’s home insurance crisis, which has been exacerbated by a series of catastrophic wildfires, including the Jan. 7, 2025, firestorms that damaged or destroyed more than 16,000 structures in the Pacific Palisades and Altadena areas alone (Source ID: 1). Kim’s plan, known as the Natural Disaster Insurance for All proposal, aims to make home insurance more affordable and increase its availability by removing the profit motive from the system. The plan would require commercial carriers to sell coverage for perils such as water damage, wind, theft, liability, and ordinary house fires, but not for damage caused by large wildfires. [1]
The plan would cover all existing homes, with eligibility for new homes to be explored based on their wildfire risk and how much of that is mitigated (Source ID: 1). The proposal envisions a state-run program that would hold the risk and fund claims for wildfire damage, with premiums split between an amount covering a home’s individual fire risk and rebuild costs and a small capped fee to build capital in the case of a bad wildfire season, such as in 2025. The idea is to ensure that the plan focuses on 'ordinary homeowners and not on rebuilding mansions,' according to the brief. [1]
Advertisement
Left to be determined is whether wildfire claims would be handled by carriers who insure a homeowner’s other perils, or whether the plan would hire and manage its own adjusters (Source ID: 1). Following the 2025 wildfires, claims management has risen to be a top issue, with the Department of Insurance and Los Angeles County investigating multiple home insurers, including State Farm General, the state’s largest, over how they handled claims, following policyholder complaints of delays, underpayment, and denials. [1]
Sources
Prepared with AI assistance from the cited sources.
The Cali Reporter newsletter
The stories worth your time.
California, the country, and what comes next. Join our free newsletter for reporting that keeps you informed.
More in Los Angeles
- Los Angeles Officials Reach Preliminary Agreement on Olympic Contracts
Los Angeles officials have reached an unprecedented preliminary agreement to ensure local businesses receive a meaningful share of the estimated $4 billion in contracts for the 2028 Summer Olympics.
- Surfing Legend's Murder Investigation Expands
New evidence has emerged in the murder case of Kurt Van Dyke, a renowned California surfer, revealing a broader involvement of individuals beyond his girlfriend.
- Orange County Sheriff’s Department Investigates Possible ICE Collaboration
An internal investigation is underway at the Orange County Sheriff’s Department following allegations that two employees may have facilitated a federal immigration detention.