“That’s all I had”: in Los Angeles, the panic of uninsured fire victims – 01/22/2025 at 11:17

Faced with the ruins of his house razed by the flames, Sebastian Harrison has no illusions. “This place will never be the same again,” breathes this resident of Malibu, without home insurance.

“I knew it was risky, but I had no choice,” the entrepreneur, hit by the crisis in the insurance market in California, told AFP.

Before the deadly fires which are still ravaging Los Angeles and its surroundings, this fifty-year-old had a “paradise” at the gates of the American megalopolis: his house on the side of the mountains, flanked by several outbuildings, overlooked the Pacific Ocean.

But private insurers, worried about the fire risk, never wanted to cover it. For more than ten years, Mr. Harrison had to rely on the public insurance system, whose premiums were constantly increasing.

When the bill approached $40,000 annually after the pandemic, compared to $8,000 in 2010, he finally gave up all coverage.

“It’s not like I bought a luxury car instead of taking out insurance, it’s just that feeding myself and my family was more important,” he says.

For the ex-actor, the fires turned into a nightmare.

“I’m very worried, because this property is all I had,” he says, hoping for federal aid.

The United States “bailed out the banks during the financial crisis, then subsidized people during Covid, so we have to hope,” he sighs.

– Climate risks –

Mr. Harrison is far from being an isolated case: in California, ravaged by multiple fires over the past 15 years, insuring your home has become a real obstacle course.

Because the democratic policies adopted to limit prices have turned against the population: prevented from setting their prices freely, insurers have folded in the face of climate risks.

The latest example, State Farm, one of the giants of the sector, announced in March the termination of around 30,000 home insurance contracts.

In the midst of this exodus, the fires ravaging Los Angeles in the middle of January reinforce the image of a California that is unreliable in the face of global warming.

Their destruction will cost tens of billions of dollars and many experts predict that they will be the most expensive fires in American history. Because in the upscale neighborhood of Pacific Palisades, a celebrity haunt engulfed by flames, the average price of a house is 3.5 million euros.

Enough to worry the authorities. Insurance Commissioner Ricardo Lara, who had just introduced major reforms at the end of 2024, openly doubts that they will be enough to stabilize the market.

“I don’t know anymore, because (…) my biggest fear was that we would suffer a catastrophe of this nature,” he admitted to the San Francisco Chronicle on Saturday.

Even the public insurance system, designed for owners excluded by the private sector, seems on the verge of implosion.

– Exodus of insurers –

Called FAIR, it was created in 1968 as a temporary solution. But with the exodus of the private sector, the number of homes it covers has increased drastically in recent years.

However, it only has $200 million in reserves in its coffers, an amount well below the expected losses in Pacific Palisades, where it insured many individuals.

To prevent the crisis from worsening, California has just decreed a moratorium, prohibiting insurers for one year from terminating contracts in areas affected by the fires.

A respite far from relieving Gabrielle Gottlieb, whose house in Pacific Palisades survived the flames.

“My insurer has canceled many of my friends in recent months and I am afraid that he will let me down too,” explains this 60-year-old artist. “Basically, we are already being told: +good luck beyond a year!”

Fears to which are added the announced explosion in insurance premiums, because of the recent reforms adopted.

To stem the flight of insurers, California will grant them greater pricing freedom. In exchange for their return to areas with high fire risk, they will be able to set their prices by evaluating the risk of future damage, necessarily higher than the history of past losses used until now.

“Real estate and taxes are already very high in California,” sighs Robert Spoeri, a Pacific Palisades owner let go by his private insurer in September. “If insurance increases further, who will be able to live in this state?”