California’s Insurance Crisis: A Growing Protection Gap

Wildfires in California are becoming more frequent and severe, widening the gap between economic and insured losses. Howden Re’s report 2025 Los Angeles Wildfires: A Path Forward highlights an underinsurance crisis caused by strict regulations and insurer withdrawals.

Insured wildfire losses are projected between $20 billion and $45 billion, yet 200,000 households lost coverage in 2023, and the FAIR Plan is overwhelmed. This crisis disrupts home sales and increases financial strain on the state.

Howden Re calls for regulatory reforms, risk-based pricing, and investments in mitigation. A $6 billion resilience investment could have reduced economic losses by 50%, helping restore market stability.

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