On Tuesday, after a ferocious Santa Ana windstorm blew through Southern California, a severe brush fire broke out in the wealthy Pacific Palisades neighborhood of Los Angeles, forcing tens of thousands of residents to evacuate. Another massive brush fire broke out near Pasadena around the same time. Together the two blazes have killed at least 10 people and destroyed an estimated 10,000 structures as of Friday afternoon, and they’ve caused more than $20 billion in damages, according to a preliminary estimate from J.P. Morgan.
If this estimate holds true, it will test insurers’ commitment to a market that has been teetering on the verge of collapse for the better part of a decade now. Over the past five years, California has become a poster child for what climate-fueled weather disasters can do to a state’s home insurance market. Following a rash of historic wildfires in 2017 and 2018, insurance companies have fled the state, dropped tens of thousands of customers in flammable areas, and raised prices by double-digit percentages.
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