FAIR Plan gets 4,400 insurance claims from LA County wildfire victims

Jeff Collins, Los Angeles Daily NewsDaily News

Expected claims payments to Los Angeles County wildfire victims appear to have exceeded $900 million for the state's insurers of the last resort, allowing it to tap into "reinsurance" payments from back-up providers.

In a statement released Thursday, Jan. 30, the California FAIR Plan reported receiving more than 4,400 claims from victims of the Palisades and Eaton fires in the past three weeks.

"The FAIR Plan is accessing reinsurance to help pay claims," the statement said.

In earlier statements, the FAIR Plan said it can only tap into reinsurance -- essentially insurance for insurance companies -- once it pays its first $900 million in claims.

See also: Why all California homeowners could be on the hook for LA County wildfire costs

The damage caused by the wind-fueled firestorms in Pacific Palisades, Malibu, Topanga and Altadena neighborhoods consumed more than 37,000 acres, destroying nearly 16,000 structures and killing 29 people.

Finances for the "Fair Access to Insurance Requirements" Plan have been under scrutiny since the devastating wildfires erupted on Jan. 7. If the state-created insurance pool runs out of money, it can invoke payment mechanisms that can affect virtually every insured home and building owner in the state.

The FAIR Plan provides coverage for homes and businesses that can't get policies on the open market. Consumers can only get fire coverage through the plan, often at a higher cost. In addition, owners must seek separate "wraparound" policies for liability, theft and other types of coverage.

Yet, the FAIR Plan only has enough cash to cover a tiny fraction of its total $458 billion exposure. Last March, FAIR Plan President Victoria Roach told the provider only had $700 million in cash on hand.

Should it run out of money, state law gives the FAIR Plan the ability to pass the hat among more than 100 fully licensed insurance companies in the state, provided Insurance Commissioner Ricardo Lara approves such an "assessment."

Those insurance companies can, in turn, seek to pass their share of the assessment on to their policyholders as a "supplemental fee."

See also: Anguished homeowners struggle to keep their insurance

However, it's not yet clear if the FAIR Plan needs to invoke these payment mechanisms.

"We have not yet asked the California Insurance Commissioner for an assessment in response to the Southern California fires," the statement said.

The last time the FAIR Plan issued an assessment was in 1994.

Meanwhile, the FAIR Plan has been staffing up to meet the crush of phone calls and claims adjustment requests it's receiving.

In earlier statements, the Plan said it ensures about 22% of the structures in the Palisades Fire zone and about 12% of the structures in the Eaton Fire zone. It's potential exposure totals more than $4 billion in the Palisades fire and over $775 million for the Eaton Fire.

As of Tuesday, Jan. 28, the FAIR Plan had received over 3,200 claims for damage from the Pacific Palisades Fire and over 1,200 claims for damage from the Eaton Fire, the statement said.

The FAIR Plan has assigned about 250 desk examiners and field adjusters to work on its claims and is hiring temporary staff, including customer service workers. Independent adjusting firms are helping with damage inspections, and third-party catastrophe examiners and adjusters are helping to "meet surging demand."

Additional information about submitting claims is available at www.cfpnet.com .Related Articles