California's Last-Resort Home Insurer Faces Insurance Crisis: Solutions and Challenges

Enrollment in California's FAIR Plan, the state's last-resort insurance option, is surging as traditional insurers scale back coverage due to climate change-related risks, prompting concerns about the plan's financial stability. The plan, funded by insurers doing business in California, has seen a record increase in policyholders and now faces a total risk exposure of $311 billion. State officials are grappling with an insurance crisis, with major companies dropping customers in areas prone to wildfires, flooding, and hurricanes. Proposed regulations aim to modernize the insurance marketplace by allowing insurers to use catastrophe modeling that accounts for climate change impacts, but consumer advocates argue that this could limit transparency and lead to price-gouging.