California Insurance Crisis

Insurance companies in California are required to contribute a collective $1 billion to the FAIR plan, the state's insurer of last resort for fire coverage. This funding is crucial because the FAIR plan has seen a significant increase in claim requests following recent wildfires, with nearly 5,000 claims filed. The plan's financial struggles stem from the fact that many traditional insurers, like State Farm, have ceased offering fire coverage, leading more people to rely on this state program. Consequently, companies involved must contribute based on their market share, raising concerns about potential increases in premiums as they collectively fund the plan to cover growing claims.