“The one industry whose entire business is pricing risk has arranged to carry none of its own: the premium is yours, the fire is yours, and the backstop, when it arrives, is yours as well.” — from the editor’s desk
A renewal notice, $312 higher, "risk factors" unexplained
The carriers leave; the state's last-resort plan swells to $768 billion
The FAIR Plans were born in 1968, priced for riots — the ancestor law that decides today's fire bill
Who is actually holding the risk right now — the columns so far
Every September the reinsurers meet in Monte Carlo and reprice the planet over lunch
Hurricane Andrew, 1992 — the storm that invented the catastrophe-model industry, so a computer could price your street
The rating agencies price the treasuries that backstop the plans
The resident, the one party who cannot reprice anything
Chapter 1: The Renewal Notice
30 August 2026
There's an envelope in your mailbox, and I'd like you to open it, because nobody does. It's the renewal notice for the fire insurance on your house, and it is $312 higher than last year's, and the explanation, if we're being generous with the word, is a phrase: "risk factors." Two words. No noun you could take to court. Now hold that thought — hold the envelope, actually — because I'm going to show you how that number was built, the way you'd show someone how a house is framed, and by the end of it you'll understand why the phrase has no noun in it. The noun is expensive.
Here's how a fire policy is built, in the workshop sense. A carrier — the company with the jingle — agrees to pay if your house burns. But the carrier doesn't want to hold that promise alone, so it buys a promise from a reinsurer, who holds pieces of ten thousand such promises and charges accordingly. And neither of them decides your price by looking at your house. They run a model. A computer that has read every fire and predicts the next one, street by street. Three parties, three prices, one envelope. Remember the three; we'll count them again shortly.
Now, in California, the first party has been leaving the room. The big carriers paused or stopped writing new homeowner policies in the places most likely to burn, and when the carriers leave, the state has a plan for you — literally, the California FAIR Plan, the insurer of last resort, the place nobody plans to end up. As of this June the FAIR Plan carried 696,562 policies, up 157 percent since September 2022, and $768 billion in exposure, up 250 percent over the same stretch. Nearly seven hundred thousand households arrived at the last resort. Consider, for a moment, how much resort had to fail first.
State Farm, the largest carrier in the state, marked roughly 70,000 policies for non-renewal in 2023, then — in the manner of these things — reversed itself, with a codicil: the policy comes back, but the fire part of it goes to the FAIR Plan. The house is covered. The thing the house was afraid of has been quietly moved to somebody else's column. In the trades, I believe, that's called keeping the customer and returning the risk, and I've never once heard it called a comeback.
And the state, bless it, has filed paperwork of its own. California's Sustainable Insurance Strategy now lets carriers price with forward-looking catastrophe models and pass through the net cost of their reinsurance — provided they promise to write policies in the burned places. Which means your fire is now priced three times before the envelope reaches you: once by the carrier, once by the reinsurer the carrier buys from, and once by the model that predicts it. Each pricing takes its margin. The house, I'm told, burns the same amount regardless.
So there's your envelope. The carriers left; the state's own plan swelled to three-quarters of a trillion dollars of promises; and the price of being predictably flammable travelled, as prices do, to the one party in this arrangement who cannot reprice anything: you, at the mailbox, reading "risk factors" and wondering which ones.
What I haven't told you is who is actually holding your risk this morning, now that the carrier has handed it to the state and the state has priced it off a computer. That requires a trip to a certain hotel in Monte Carlo, and before that, curiously, a riot in 1968.
Last time, I left you at the mailbox with an envelope that cost $312 more than it used to, and I promised you a riot. I keep my promises in the order I make them, so: 1968.
American cities were burning — that part you know — and when the fires went out, the insurance companies did not come back. Whole neighborhoods, block after block, could not buy property coverage at any price. A national advisory panel appointed by President Johnson looked at this and delivered a warning with an unusually long shadow: the nation's cities could not be revived without fair access to property insurance. Congress responded, in August 1968, with the Urban Property Protection and Reinsurance Act, and here is the machinery of it, because the machinery is the inheritance. The federal government offered the insurance companies riot reinsurance — Washington would hold the riot risk so the carriers wouldn't have to — and in exchange, the states would set up plans guaranteeing that anyone who couldn't buy coverage on the open market could buy it somewhere. Fair Access to Insurance Requirements. FAIR plans. Pennsylvania passed its own FAIR Plan Act that same July; California's came along in the same wave. Do note the shape of the trade: the government took the risk, the industry took the customers, and the arrangement was priced for a specific disaster — an urban one, a social one, a 1968 one.
Now watch what fifty-odd years does to a piece of machinery nobody rebuilds. The plan built for riot-scarred city blocks is today carrying 696,562 California households and $768 billion of exposure — not against riots, against wildfire, a disaster the 1968 draftsmen never priced — and it is carrying them because the carriers left again, which is the one part of the story 1968 would recognize instantly.
So let's do what I promised the title we'd do, and find out who is actually holding your risk. Follow the dollar upward. You pay the FAIR Plan. When the FAIR Plan's money runs out — and in February 2025, after the Palisades and Eaton fires buried it in thousands of claims, it did — the Plan has a statutory power with a beautiful dry name: the assessment. With the Insurance Commissioner's approval, it billed every admitted property insurer in California one billion dollars, divided by market share. The carriers who left the burning neighborhoods were handed the bill for them anyway, which has a certain justice to it, until you ask what carriers traditionally do with bills.
And above the assessment sits the next floor: the FAIR Plan buys reinsurance of its own — a tower, in the trade's language, $2.63 billion of it placed toward a $4.85 billion limit, which pays only after the Plan eats the first $900 million itself, and then in layers, with co-participation, like a hospital bill drawn by an architect. Read that again, slowly: the insurer of last resort has insurers. The place your risk went when the market refused it has itself passed your risk along, upward, outward, to companies most people have never heard of, headquartered in places most people could not find on a map.
So the reconciliation, as of this chapter: you hold the premium. The Plan holds the promise. The state's insurers hold the assessment. And the top of the tower is held by the reinsurers — the quiet industry that prices the planet's disasters wholesale. Who are they? Where do they meet? What do they decide, and over what?
Every September since 1957, several thousand of them gather at the same few hotels in Monte Carlo, for five days, to negotiate the price of next year's catastrophes.
Two pieces of paper on the table this morning, please: last year's premium statement and this year's. Lay them side by side. If you're one of the 696,562 households on the FAIR Plan, the difference between them is the number we started with. If you're not — if you kept your carrier, congratulated yourself, and never gave the last resort a thought — look instead for a line you haven't seen before, a small percentage with a long name: temporary supplemental fee. Hold that. I promised you lunch in Monte Carlo and the reservation stands, but a man who leaves for lunch without counting the money on the table comes back to a different table. So, before we go: the tally.
Here's how a billion dollars is physically moved from a burned hillside to a stranger's statement, because the mechanism is older than most of the people operating it. The FAIR Plan writes to the Insurance Commissioner — it did so on February 11, 2025, five pages, on letterhead — citing two sentences of the Insurance Code passed in 1968: the program may, with the Commissioner's approval, assess all members in an amount sufficient to operate the facility; and each member participates in the losses in the proportion its premiums two calendar years earlier bore to everyone's. The Commissioner signs an order the same day. The Plan sends participation notices to every admitted property insurer in the state, payment due in thirty days. Then the members turn around. Each files a rule-change application under Proposition 103, within six months, asking to collect a temporary supplemental fee from its own policyholders in the lines that were assessed. For an assessment of a billion dollars or less the fee may recover half of what the member paid; for anything above a billion, all of it. Ninety-seven percent of this one landed on personal lines. That is the whole machine: one letter, one order, one notice, one filing, one line on a bill.
Now the column. Every figure below is from the Plan's own letter, the Plan's own statistics page, or the Commissioner's order, and I've dated each one, because the numbers move and I want you to be able to catch me.
The fire: $4,039,000,000 incurred as of February 9, 2025, on 4,794 claims — $3.404 billion for the Palisades, $635 million for Eaton. A year later, about 5,400 claims handled and roughly $3.5 billion paid.
The Plan's cash: $1.5 billion on the morning of January 1, 2025, of which $510 million was unallocated — the part a normal company would call surplus, and which, the letter is careful to say, belongs to the member companies. By February 11: $1.2 billion, the unallocated funds exhausted.
The Plan's retention: $900 million per event before reinsurance pays a dollar. For the treaty year that followed, $1.25 billion.
The reinsurers: a tower to $5.78 billion, with a first layer of $350 million above the retention, then co-participation up each floor. Of that $5.78 billion the Plan itself carries about $3.5 billion in retention, co-pays and reinstatement premiums. Anticipated recoveries from the top of the tower, net: $1.45 billion. Last chapter's figure of $2.63 billion placed is the same tower counted from the other end.
The members: $1,000,000,000, approved February 11, 2025, divided by market share, due in thirty days. The previous assessments in the Plan's history: $150 million in 1993, $60 million in 1994, $50 million in 1995. The state's largest carrier's share this time, by its own account: over $165 million.
The members' customers: up to half of that — $500 million — as a temporary supplemental fee. The largest carrier's fee is 1.13 percent at each of two renewals, beginning December 1, 2025, on homeowners and rental-dwelling policies.
You: $2.04 billion in written premium, 696,562 policies, $768 billion of exposure, as of June.
Read it down. The fire is four billion. The reinsurers, the tall quiet people at the top of the tower, are good for about a billion and a half of it, net. The members are good for a billion, of which they may take half back from their customers — most of whom have never held a FAIR Plan policy in their lives. The Plan itself holds the first $900 million of every event, now $1.25 billion, plus the co-pays up the tower, out of cash that stood at a billion and a half the morning before the fire and belongs to the member companies. And the premium, the two billion a year that is supposed to fund the thing — that's you, in the first column, the easy one to read. What the column shows is not who is holding the risk. It's who is holding the bill, and the two lists are not the same list. The risk went up the tower. The bill came down it, and it came down to the neighbor who kept his carrier, in a line on his renewal he will never look up. The last resort, it turns out, is a shared resort. Nobody sent invitations.
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“The official line, and it's a fair one: the FAIR Plan is not a state agency and is not taxpayer-funded; assessments are the 1968 design working as drawn, the Plan said so itself in its letter; and recoupment is capped at half. Every word of that is in the fold.”
Every word of it is, and I'll add only what the fold adds. "Not taxpayer-funded" and "policyholder-funded" describe the same adult with a different envelope, and the policyholder paying this particular fee is, by the machine's design, the one who was not in the Plan. One more thing about the column before you fold it up. Nowhere in it is a price. Every figure is a payment. The price — the number that decided how tall the tower stands, why the retention rose, what a burning state pays for protection this year against last — was set somewhere else, by other people, on a calendar of their own.
Look at the date on this chapter, and then look at a calendar. The sixty-eighth Rendez-Vous de Septembre closed yesterday at the Fairmont Monte-Carlo — four days, roughly 3,700 people from ninety countries, workshops, an official cocktail, and, in the organisers' own words, the reason anyone goes: bilateral discussions ahead of the renewals. That's the phrase. Not a conference. A schedule of meetings between the people who sell catastrophe protection wholesale and the people who buy it, held in a principality chosen for being nobody's home ground, in the one month of the year when nobody has yet said a number out loud.
It began in 1957. André Roux, chairman of Assurances Générales, and a handful of others decided that the reinsurance market needed a place to meet, and chose Monaco because it was neutral territory with enough hotels within walking distance of each other. About five hundred professionals from twenty-seven countries came. The organisation that runs it today says the September meeting marks the beginning of the annual renewal negotiations, since most reinsurance contracts expire on December 31 — which is to say that the price of the world's disasters for the coming year starts to form in the second week of September, over lunch, and firms up over the following sixteen weeks. Now hold that thought, because I want to show you how a price is actually made, and it is not made the way you think.
Here is the workshop version, from a paper by an actuary at Guy Carpenter, one of the brokers who run the room. The buyer — the cedant, an insurer or a state plan — hands its broker a submission: the portfolio, the losses, the structure it wants. The broker sends it to the reinsurers. Each reinsurer runs the numbers and returns a quote — an asking price — blind, without seeing what any competitor asked. There is only one bid in this auction, the buyer's, and there are many asks, and the broker keeps the order book. The reinsurer's quote is not its technical price; the paper calls the gap between the two the strategy differential, and it is a function of reputation, of recent quotes on comparable programs, of history. Then the broker does the thing that matters. It sets firm order terms: a finished contract with a single price, and the price is not negotiable. Each reinsurer now decides only how much of it to take — a percentage of the layer, with "not at all" being an option — and the broker has set the number right if the layer fills to exactly one hundred percent. That's the mechanism. The seller does not name the final price. The middleman does, and the seller decides whether to show up.
What they said last September, at the Fairmont, in the year of the fire: Swiss Re's press conference on September 8, 2025, put the insured losses from the Los Angeles wildfires at forty billion dollars; said wildfire had made up more than seven percent of natural-catastrophe losses in the decade to 2024, over five times its share in the decade before; said global reinsurance capital had risen about seven percent to $610 billion in 2024; and said that annual insured catastrophe losses were heading toward $150 billion a year, with peak scenarios past $300 billion. The slide on wildfire ended with a sentence I'd like you to keep: risk ownership must be shared across homeowners, cities, re/insurers and governments. Note who is listed first.
What the firm order terms said, sixteen weeks later, on January 1, 2026: Guy Carpenter's index of the price of property-catastrophe reinsurance — the change in dollars paid for the same coverage, year on year — fell an estimated twelve percent worldwide. Gallagher Re put risk-adjusted property-catastrophe pricing down ten to twenty percent across every major region, with reinsurance capital at a record $838 billion, and observed that the renewal itself ran late because buyers were content to wait for a better number. Guy Carpenter estimated reinsurers earned a seventeen percent return on equity in 2025, on a year in which insured catastrophe losses were about $121 billion, of which reinsurers bore eleven percent — against twenty percent in the years before 2023. In the year after the most expensive wildfire in history, the wholesale price of catastrophe went down, and the wholesalers' share of the catastrophe went down with it.
One California buyer's terms were in that January. The FAIR Plan's retention — the amount it eats per event before the tower pays anything — was $900 million at the time of the fire. For the treaty year that followed, by the Plan's own deck, it is $1.25 billion.
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“The official line: nothing is signed in Monte Carlo, it's a networking week; the price is a market outcome, record capital chased too little demand, and the number fell, which is good news for the consumer at the end of the chain.”
Nothing is signed in Monaco; the organisers say so themselves, and the broker's paper explains why — until the broker issues firm order terms there is no price, only asks. And the number did fall. It fell for the cedants, who could afford to wait for it. Whether a wholesale price reaches the end of the chain passes through a rate filing, and the FAIR Plan's next one — the first, by its own deck, to include the cost of reinsurance and a catastrophe model — asked for 35.8 percent. Which brings us to the model, because the men at the Fairmont did not price your street by looking at it. A computer did, and the computer was invented by a hurricane.
There is a number on your renewal that no human being calculated. Not the premium — the thing under it, the wildfire score, the two words "risk factors" wearing a decimal. A computer produced it, and the computer's grandmother is a hurricane, and I'd like to introduce you, because you're paying her rent.
August 24, 1992. Hurricane Andrew crosses Dade County, Florida, south of Miami, and the insurance industry does what it did in those days, which was to estimate the damage with rules of thumb based on premiums. The worst storm in living memory was Hugo, three years earlier, at four billion dollars, so the guesses ran to the mid-single-digit billions. One small firm did not guess. Applied Insurance Research had been founded five years earlier by Karen Clark, who had built a hurricane model that almost nobody in the industry took seriously, and on the day of landfall she ran Andrew through it. The model said the insured loss could exceed thirteen billion dollars. A reinsurer in London bet her five pounds it wouldn't pass six. The phones, she later said, started ringing right away. The final insured loss was $15.5 billion in 1992 dollars — twenty-five billion in 2011 money — and the machine had been closer than every human in the business.
Consider what that did. Eight insurers went under — seven Florida companies and one from out of state; six were declared insolvent by December. The Florida legislature met in special session that month and did something you should hold onto: it authorized the city of Homestead, the town the storm had flattened, to issue municipal revenue bonds to pay the claims of the dead insurers, and it pledged as the revenue stream a special two-percent assessment on every insurer in the state, for the life of the bonds. Remember that. It will come back with a California accent. And the industry that had bet five pounds against the computer began buying the computer.
Here is how one is built, in the regulators' own four-part description, because it's the part nobody explains. First, the hazard module: a catalogue of simulated events — tens of thousands of storms, or fires, that never happened, each with a location, a strength, a path, and an annual probability of occurring. Second, the vulnerability module: damage functions, which say that for a given intensity at a given spot, a building of a given construction, occupancy and height will lose such-and-such a fraction of its value. Third, the exposure module, which is the insurer's own database — your address, your roof, your insured value, your deductible. Fourth, the financial module, which runs every simulated event against every address, applies deductibles, limits, attachment points and reinsurance, and hands back a curve: the probability of losing more than any given amount in a year. That curve is the price. The model does not know your house. It knows a house like yours, on a slope like yours, in ten thousand fires that haven't happened, and it charges you for the average.
California, alone among the states, would not let that curve into a rate filing. Rates had to be built on history — the fires that had happened — until December 13, 2024, when the Insurance Commissioner finalized a regulation admitting catastrophe models, on a condition: any insurer using one must write at least 85 percent of its statewide market share in the wildfire-distressed areas, rising five points every two years, and the model must account for what homeowners have done to their houses. A model advisor was hired. The Department began taking model petitions on January 2, 2025. Five days later Los Angeles caught fire, and on January 17, with the Palisades fire 31 percent contained, Moody's RMS ran its wildfire model against the burn, its field teams, and the FAIR Plan's $112 billion of exposure in Los Angeles County, and published a number: twenty to thirty billion dollars insured. The computer priced the fire while the fire was still burning. On July 24, 2025, after a six-month review, Verisk's wildfire model became the first ever to clear the state's process; Moody's followed in August; Karen Clark's own firm was in the queue. Then the state licensed the computer to price your street. The FAIR Plan's rate filing that September was, by its own deck, the first to include a catastrophe model.
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“The official line, and it is close to unanswerable: the alternative to a model is a guess, and Andrew is what a guess costs — eight insolvencies and a special session. A model is the most rigorous tool the industry has.”
It is, and the fold agrees with him down to the decimal; that's why I told you about the five pounds. The fold adds one thing. The regulation had to write down, as a condition of admitting the model, that the model must account for mitigation — the roof you replaced, the brush you cleared — because that was not something the state's rules could previously require. The computer is rigorous about the fire. It had to be instructed, by statute, to notice the homeowner. Now: a computer that can price a fire while it's burning can price a bond, and Florida, you'll recall, has already shown us what the bond is backed by.
You own a bond, or you did once — a savings bond from a grandparent, a municipal something in a retirement account — and you know the two things that make it a bond. Somebody promised to pay it back, and somebody else graded the promise. Hold both, because the plan of last resort now has bonds, and I'd like you to look at who made the promise and who did the grading, and then at the one word the statute uses to describe whose debt it is not.
Start with the order of payment, which is written into the FAIR Plan's Plan of Operation and recited in the Commissioner's assessment order. When the Plan owes claims it pays, first, from premiums. Second, from reinsurance proceeds, any line of credit, and, if sold, catastrophe bonds. Third — only if it is substantially threatened with insolvency because the first two floors are empty — by a pro-rata assessment on every member insurer. Three floors. In January 2025 the second floor held reinsurance and nothing else — no line of credit, no bonds — behind a retention of $900 million, and the fire reached the third floor in five weeks. Since then the Plan has been building the second one out, and the receipts are in.
Here is what stands there now. On December 12, 2025, a Bermuda company called Golden Bear Re Ltd., which exists to do exactly one thing, sold $750 million of notes to investors — the largest wildfire catastrophe bond ever placed. Indemnity trigger, meaning it pays on the Plan's actual losses rather than an index; per-occurrence, meaning one fire at a time; three years, to the end of 2028; investors paid a risk spread of 9.75 percent to stand there, against a modelled expected loss of 2.24 percent a year. On February 24, 2026, a second series: $400 million, 9.5 percent, to February 2029, for $1.15 billion of capital-markets reinsurance in all. Three days later, on February 27, 2026, the Commissioner's Order 2026-1 authorized a $600 million revolving line of credit from a private lending group, maturing February 26, 2027, its stated purpose to "potentially avoid the need to levy an assessment." And above all of it sits Assembly Bill 226, chaptered October 9, 2025: the California Infrastructure and Economic Development Bank may, with the Commissioner's prior approval, issue taxable or tax-exempt bonds and lend the proceeds to the Plan to pay claims.
Now the workshop paragraph, because the plumbing is the point. An IBank bond is repaid by the Plan from its revenues. If the Plan cannot pay, the statute says it "shall assess members in the amounts and at the times necessary" — a special bond assessment, in the Plan of Operation's phrase, levied on the insurers writing the line of business the bond was issued for. And the Plan of Operation then adds a sentence you should read twice: special bond assessments "shall also be subject to the temporary supplemental fees described above." You met those fees three chapters ago. They are the line on the neighbor's bill. So the chain of a bond runs: investor to IBank, IBank to Plan, Plan to burned house; and, if the house was expensive enough, Plan to member insurer, member insurer to rule-change filing, rule-change filing to a percentage on every homeowners policy in the state. The statute's own sentence on whose promise this is: the bonds "shall not be deemed to constitute a debt or liability of the state," and are "payable solely from the revenues and assets securing the bonds." That was Florida's design too — the Homestead bonds of 1992, secured by a two-percent assessment on every insurer in the state, which you met last chapter. California copied the machine and kept the disclaimer.
Which brings me to the graders, and here I must report a redraw. The route card for this chapter said the rating agencies price the treasuries behind the plans. There are no treasuries; the record says so in the sentence above. What the agencies did, in the year of the fire, was grade everything around the promise. They graded the fire: S&P said on January 9, 2025, with the fires still burning, that it did not expect them to change any insurer's rating; a Fitch director said a week later, of the Plan, that it did not have enough surplus for this level of loss — which, on the figures reported at the time, it did not: about $200 million of surplus against a $900 million retention. They graded the members who would receive the assessment: AM Best had already cut the state's largest carrier, State Farm General, from A to B in April 2024, citing surplus deterioration and a regulatory environment that limited its ability to raise rates; Fitch put Mercury on negative outlook on January 24, 2025; and in November 2025 AM Best cut State Farm's parent from A++ to A+, naming wildfires among the weather losses, and affirmed the California subsidiary at B. Everyone in this chain has a grade except the promise itself, which has a disclaimer.
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“The official line: not one dollar of this is taxpayer money — the bill says it in so many words — and a plan that can borrow, sell bonds and buy reinsurance is a plan that will not have to assess again. That was the whole purpose of the reforms.”
The bill does say it, and I've quoted it, and the line of credit's own order says the purpose is to avoid an assessment. The fold's only addition is the Plan of Operation's sentence about bond assessments and supplemental fees. The taxpayer and the policyholder are the same person. The difference is which envelope, and we started this whole walk with an envelope.
The envelope. Take it out again — the renewal notice, $312 higher, the two words with no noun. Seven chapters ago I promised you the noun, and you've now met all of it: the carriers who left; the machine built in 1968 for a different fire; the bill that came down the tower to the neighbor; the price made in a hotel in Monaco by a broker who names the number; the computer that priced the fire while it burned; the bond that is not a debt of the state. Six risk factors. What I haven't done is put you in the picture, and you belong in it, because you're the only party in the whole arrangement who cannot do the one thing everyone else does. Everyone else reprices.
Here is how a price physically reaches you, because it is not the carrier that sets it. Since 1988 every property insurer in California has needed the Insurance Commissioner's prior approval to change a rate. The insurer files. If it asks for more than seven percent and a consumer group intervenes, there must be a public hearing unless the parties settle. The Commissioner may grant interim relief from a plainly invalid rate. Only the Commissioner approves. Watch the sequence in 2025. On February 3, the state's largest carrier asked for an emergency interim increase — 22 percent on homeowners, 15 on renters and condominiums, 38 on rental dwellings — citing "swift capital depletion." On February 14 the Commissioner wrote back that the burden had not been met, and recited the record: 6.9 percent approved in 2021, 6.9 in 2023, 20 percent in December 2023; no new policies written since May 2023; 30,000 homeowners policies non-renewed in March 2024. A three-day hearing in April. On May 13 the Commissioner adopted the judge's decision: 17 percent on homeowners, effective June 1, conditioned on a $400 million surplus note from the parent and no block non-renewals through the end of 2025, with a full rate hearing still to come. On December 1 the temporary supplemental fee began: 1.13 percent, two renewals running, to recover half of an assessment share of more than $165 million. Four filings, one fee, one year.
Now the last resort. The FAIR Plan's own deck to the legislature shows its dwelling rate history in one small table. In 2020 it filed for 40.8 percent and was approved 15.6. In 2021 it filed for 48.8 and got 15.7, in 2023. In September 2025 — the first filing built on a catastrophe model and the cost of reinsurance — its indicated need was about 80 percent, and it filed for 35.8. On August 11, 2026, the Plan announced the Department's decision: 29.1 percent on average, effective October 15, for new and renewing policies, weighted toward the wildfire portion of the premium, so that some in low-risk places will pay less and some on the hillsides considerably more. There are 696,562 households on the Plan as of June, $768 billion of exposure, $2.04 billion a year in premium. Almost six percent of the state's property insurance market, and the door most of them came through was a non-renewal notice.
What can you do. Some things, and I'll count them honestly. If you were in the Palisades or Eaton perimeters or the ZIP codes beside them, the Commissioner's bulletin of January 9, 2025 forbade your insurer from cancelling or non-renewing you for a year, whether or not you lost anything. If your carrier uses one of the new models, it has promised to write 85 percent of its statewide share in the distressed areas. The Plan offers discounts for reducing wildfire risk, and the model regulation requires the models to notice when you do. That's the list.
And what can't you do. You cannot quote. You cannot choose a participation percentage. You cannot, as the brokers said of last January's buyers, be content to wait for a better number. Every other party on this walk has a walkaway price — the broker's paper says so in plain words, "not at all" being an option for each reinsurer at firm order terms. You are the one party for whom "not at all" is not an option, because the mortgage requires the policy, and the FAIR Plan's own description of its product is that it satisfies lenders' security requirements. Three parties priced your fire in Chapter One: the carrier, the reinsurer, the model. In 2025 the carrier got 17 percent and a fee; the reinsurer's wholesale price fell twelve percent while the Plan's retention rose to $1.25 billion; the model was licensed on July 24. The three prices moved in three directions. Yours moved in one.
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“The official line: FAIR Plan rates must by statute be actuarially sound — adequate to cover expected losses — and 29.1 percent is what the risk costs. The alternative is a plan that cannot pay, and the last time that happened the answer was a billion-dollar assessment.”
That's the statute, and the deck says the same. The fold adds only the arithmetic in the Plan's own table: an indicated need of about 80 percent, a filing of 35.8, an approval of 29.1. Whatever the difference is, the Plan of Operation says where it lives if a fire finds it — third floor, the assessment, the neighbor's line. Counts, not motives; that's all the fold carries.
So: risk factors. There are six, and you have met each of them, and you cannot reprice any of them. On October 15 the rate goes up 29.1 percent on average. The fire, when it comes, will be priced by a computer while it is still burning, paid down a tower whose owners bore eleven percent of the world's insured catastrophe losses last year, and settled on a bill that goes to whoever kept their carrier. The next one has not been priced yet. That happens next September, in Monaco, over lunch.