Business
FAIR Plan to assess insurers $1 billion for L.A. fires; consumers may be on the hook for nearly half
The California FAIR Plan received approval Tuesday from the state’s insurance commissioner to assess its member companies $1 billion to help pay its Los Angeles fire claims — with consumers possibly on the hook for nearly half of that under a new Department of Insurance policy.
The plan said in a letter to Insurance Commissioner Ricardo Lara that it expects losses of roughly $4 billion from Pacific Palisades, Eaton and Hurst fires.
Established as an insurer of last resort, the plan is backed by California’s licensed property insurers, which are required to pay claims when the plan runs through its funds. However, they can surcharge their own policyholders to recoup some of that assessment under a policy put in place last year by Lara.
Lara claimed that his policy would prevent consumers from having to pay the full cost of any plan assessment on their own insurer. He reiterated that position on Tuesday in announcing approval of the $1-billion carrier assessment — which does not mean that insurers can now assess their own policyholders. That is a separate decision he has yet to make.
“I took this necessary consumer protection action with one goal in mind: The FAIR Plan must pay claims just like any other insurance company. I reject those who are hoping for the failure of our insurance market by spreading fear and doubt. Wildfire survivors can’t cash ‘what ifs’ to pay for food and rent, but they can cash FAIR Plan checks,” he said.
Under Lara’s policy, the plan can assess its member carriers — once it runs through its reserves, reinsurance and catastrophe bonds — up to $1 billion to pay residential claims and $1 billion to pay commercial claims.
The carriers can then surcharge their residential and commercial customers for half of what they are assessed. (Homeowners could not be surcharged for commercial losses.) There are no surcharge limits to any assessments that exceed those totals. The plan said in its letter to Lara that 97% of its L.A. fire claims were residential.
Just two days after the Palisades fire began, legislators introduced a bill that would allow the FAIR Plan to float bonds if the insurer faces “liquidity challenges.” The FAIR Plan said it supports the bill, which has yet to move forward.
Los Angeles advocacy group Consumer Watchdog, which opposed Lara’s allowance of policyholder surcharges last year, said it would seek to block them now. It said the surcharge policy was issued in the form of a “bulletin” and not a regulation subject to typical rulemaking procedures.
“Homeowners across the state shouldn’t be on the hook because insurance companies dumped too many homeowners on the FAIR Plan. We’ll explore every legal option to stop the surcharge if insurers try to make homeowners pay,” said Carmen Balber, executive director of the group.
This is the first time the plan, established in 1968, has assessed its members since a series of fires and separate losses related to the 1994 Northridge earthquake. The assessments totaled $260 million, or $563 million in today’s dollars, according to the Insurance Department. They did not result in policyholder surcharges.
The issue of whether carriers can assess their own policyholders for a FAIR Plan assessment grew in importance amid California’s home insurance crisis, which has seen insurers stop writing new policies and issue nonrenewal notices to existing customers. That has sent desperate homeowners flocking to the FAIR Plan, which offers more limited policies with a $3-million cap on dwelling coverage.
The plan’s rolls have jumped from about 200,000 residential policyholders in 2020 to more than 450,000 as of last September, as its liabilities — what it could potentially have to pay out under the worst circumstances — tripled to $458 million.
In its letter to Lara seeking approval for the assessment, the plan said it has received 3,485 claims for damage caused by the Palisades fire and about 1,314 claims for damage caused by the Eaton fire, with new claims being reported daily.
The plan has paid $914 million to policyholders, with 45% of the claims reported as total losses, 45% as partial losses, and 10% as fair rental value, which covers lost rental income.
That has reduced its cash on hand to $1.2 billion, but the plan said it has other liabilities it needs to pay.
The insurer also has $5.78 billion in reinsurance, which is typically acquired from large multinational firms by front-line insurers to protect themselves in the event of a catastrophe. However, that includes a $900-million deductible and co-payments that raise the plan’s cash payouts to $3.5 billion.
Lara’s directive last year allows for policyholder surcharges, but it is up to insurers to seek them. The insurers are assessed pro rata based on their market share.
State Farm General, the largest home insurer in the state, asked for an emergency 22% rate hike last week due to its L.A. fire losses, which it has yet to disclose but which are believed to be in the multiple billions of dollars.
Jon Farney, chief executive of parent company State Farm Mutual, told The Times last month that the Bloomington, Ill., insurer would recoup what charges it could from its own policyholders as allowed under state law. “If there was a FAIR Plan assessment and the ability to pass that surcharge on, yeah, that’s what we would do,” he said.
Other insurers that have disclosed L.A. fire losses topping $1 billion include Allstate and Chubb.
Travelers Cos. said Tuesday that it expects about $1.7 billion of pretax losses from the wildfires, including from residential and commercial policies, as well as assessments from the FAIR Plan and recoveries from reinsurance.
The luxury shopping center in Pacific Palisades will reopen next month after more than $100 million in renovations forced by the January 2025 wildfire that devastated the Los Angeles neighborhood.
Palisades Village will reopen Aug. 15, owner Rick Caruso announced Wednesday. The outdoor center survived the blaze that destroyed homes and other businesses but needed refurbishment to eliminate contaminants that the fire could have spread.
Crews are putting finishing touches on mall buildings after tearing them down to the studs, treating the wood and rebuilding the walls, Caruso said.
“Everybody’s working, and stores are moving their products in,” he said. “It’s a really cool feeling that people have really locked arms and are working together.”
An electrician installs lighting for a restaurant at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.
(Myung J. Chun / Los Angeles Times)
Pacific Palisades resident Allison Polhill, who is rebuilding the home of 30 years that her family lost in the blaze, said she is “thrilled” at the prospect of returning to the mall she used to frequent. Its comeback is a boost for the community, she said.
“Every single step that we make to reopen our commercial corridors is going to bring more people back into the Palisades,” said Polhill, who expects to move back into her home at the end of August.
A total of 6,822 structures were destroyed in the Palisades fire, including more than 5,500 residences and 100 commercial businesses, according to the California Department of Forestry and Fire Protection.
Caruso previously attributed the mall’s survival to the hard work of private firefighters and the fire-resistant materials used in the mall’s construction.
The $200-million shopping and dining center opened in 2018 with a movie theater and a roster of upmarket tenants, including Erewhon, which may be the only grocer in the heart of the fire-ravaged neighborhood when it opens.
Caruso’s company was able to fill the mall with tenants despite the long shutdown.
Palisades Village is 99% leased, with the majority of tenants returning, said Jackie Levy, chief financial and revenue officer. Nearly one-third of the shops and restaurants are new to the property.
A firefighter carries a hose back to his rig while walking through a destroyed home from the Palisades fire in Pacific Palisades on Jan. 7, 2025.
(Genaro Molina / Los Angeles Times)
Last year, Pacific Palisades-based fashion designer Elyse Walker said she would reopen her eponymous store in Palisades Village after losing her 25-year flagship location on Antioch Street to the inferno.
Other neighborhood shops destroyed in the fire that are reopening at the mall include K Bakery and Loomey’s Toys, which caters to children up to age 12 and used to be across the street from Palisades Elementary Charter School.
“It’s been a journey and I’m excited because I wasn’t sure that there was going to be a place to come back to,” said toy store owner Amanda Rastegar. “Hopefully we can bring some of that magic back.”
Rastegar’s home in the Palisades survived but was damaged by the fire. The family returned about eight weeks ago. Her last memory of the fire was a burning supermarket.
“I just couldn’t wrap my brain around what was happening,” she said. “By the time I left, Gelson’s was on fire.”
Among the returning tenants is Angelini Ristorante & Bar. Well-known Los Angeles chef Gino Angelini said he will be in the kitchen next month for a return of the Italian restaurant.
“We won’t do a big celebrity open,” he said. “We want to have a very soft opening and see our customers come back.”
Construction takes place at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.
(Myung J. Chun / Los Angeles Times)
An elaborate celebration would not feel “correct for me,” Angelini said, because the devastation has been “very sad” for so many.
Other new tenants include local chef Nancy Silverton, who has agreed to move in with a new Italian steakhouse called Spacca Tutto. Women’s activewear retailer LESET will open its first West Coast location.
Caruso said he is optimistic that customers will return to the center, even though many Pacific Palisades residents are still dispersed. One tracking system estimated that about 30% of the Village’s customer base was impacted by the fire, he said.
“That means 70% did not get impacted, so there’s a lot of customers still left out there,” Caruso said. Historically, the center drew customers from as far away as Beverly Hills and Calabasas, as well as Malibu, Brentwood and Santa Monica.
He also hopes many will be inspired to visit the revived mall.
“I believe in the goodness of people and I believe that people are going to want to support the Palisades,” he said. “They’re going to want to be there and support the businesses that have had the courage and the heart to reopen.”
Walmart is rapidly expanding its network of electric vehicle chargers designed for customers to use while they shop.
The network could help fill gaps in EV infrastructure in states with greater need for chargers. Walmart, which has more than 5,000 locations in the U.S. and hundreds in California, says more than 90% of Americans live within 10 miles of one of its stores.
The chargers also offer an incentive for customers to choose Walmart — Walmart Plus members will receive a 10% discount off an average price of $0.46 per kilowatt-hour of energy at the company’s chargers.
Walmart chargers are already available at more than 75 locations in 17 states, with Texas boasting the most charging stations, followed by Florida and Arizona.
Matthew Nelson, Walmart’s director of energy policy, said last week on LinkedIn that the network will soon reach 29 states, including California.
“We are delivering on the promise of affordable, reliable and convenient charging,” Nelson said in his post.
According to Walmart’s website, six charging stations are coming to California soon, though the company did not offer a specific timeline.
The chargers will be installed at stores in Antelope, Brea, Fresno, Stockton, Suisun City and Vallejo.
Most charging sites in California will include eight to 16 fast-charging stalls, said Walmart spokesperson Kelsey Bohl.
The company first announced plans in April 2023 to install its own EV chargers at Walmart and Sam’s Club stores, with a goal of installing thousands of chargers by 2030. Partnering with ABB E-Mobility and Alpitronic, it added 25 new charging sites this past May and six more in June.
“Walmart is building a leading retail-integrated EV fast-charging network, focused on delivering an affordable, reliable and convenient charging experience where customers already shop,” Bohl said in an emailed statement. “Customers can charge while they shop, access stations through the Walmart app they already use, and benefit from affordable pricing.”
The charging stations already available include 612 individual charging stalls using 400-kilowatt chargers. Each stall has a dual charging cord with both Combined Charging System and North American Charging Standard connectors. The standard connectors, designed by Tesla, are smaller and lighter than the combined systems.
The primary way to pay for the chargers is through the Walmart app, but the company is also experimenting with built-in credit card readers to allow those without the app to use the stations.
Customers can check charger availability on the Walmart app. The company said the chargers will be available 24 hours a day.
Robotaxis could be turning into robocops.
A self-driving Waymo reported two teens to San Mateo, Calif., police on Monday after they were found drinking alcohol and shooting toy guns in the back of the vehicle.
According to a social media post from the San Mateo Police Department, officers detained two 15-year-olds after the Waymo they were riding in contacted the department and stopped in a parking lot until law enforcement arrived.
“Parents do you know where your teens are?” the San Mateo Police Department wrote on Facebook following the incident. “Waymo does!”
Officers removed both teens from the vehicle and determined they were using toy guns to shoot Orbeez out the windows. Orbeez are small, water-absorbing beads sold at toy stores.
“Toy guns, water guns, and BB guns all pose real dangers, especially to an untrained eye,” the Police Department said. “The simple handling of them can cause fear in [passersby].” “
A video posted on Facebook shows at least five officers and a police dog responding to the scene and approaching the Waymo with their weapons raised.
Waymo did not immediately respond to a request for comment.
Waymo vehicles have internal cameras and microphones that may be used in an emergency or to “promote safety and security,” according to Waymo’s online support page.
The cameras are also used to ensure the vehicles are clean and to help find lost items, according to the support page.
The company said it does not use facial recognition or other biometric identification technologies to identify individuals.
“In more urgent circumstances, support may access live video during a trip,” the Waymo page said.
The San Mateo Police Department’s Facebook post has garnered nearly 60 comments, with one user accusing Waymo of “snitching.”
“At least they got a designated driver?!” one user commented.
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