Wildfire risk is California's defining insurance problem. Solve that, and the rest follows.
California's wildfire exposure has tripled in two decades. Climate is part of the story. So is the build-out into the wildland-urban interface, decades of underinvested forest management, and an insurance market that was never structured for tail risk this large.
The diagnosis
Private insurers cannot price what they cannot model with confidence. After the 2017 Tubbs fire, 2018 Camp fire, and the LA fires of 2025, the actuarial picture changed faster than rate filings could keep up. Carriers responded the only way they could under existing rules: stop writing new policies. State Farm, Allstate, Farmers, and seven of the top twelve insurers have all pulled back from new homeowner business in California. Prop 103, written in 1988, never anticipated this dynamic.
The fix: a real reinsurance backstop
CCRP creates a California-anchored catastrophe reinsurance facility that absorbs the layer of risk above a defined threshold. Private insurers pay actuarially fair premiums into the pool. The pool builds reserves over non-catastrophe years and pays claims on qualifying events. Three things change immediately:
- Primary carriers can write policies again. With tail risk transferred to CCRP, their loss curves become priceable.
- Reserves stay in California. Today's reinsurance premiums flow to Bermuda and London. CCRP redirects that capital to a state-controlled facility.
- Wildfire mitigation gets real teeth. CCRP pricing rewards counties and homeowners who invest in hardening. Mitigation moves from voluntary to economically rational.
What it is not
Not a state-run insurance company. Not a taxpayer bailout. Not new bureaucracy without offsetting savings. CCRP is a structural reform, not an expansion of government. It works because reinsurance pools work, in Florida and at the federal level for flood. California's failure to have built one twenty years ago is the source of today's market collapse.
Day-one priorities
- Convene a public CCRP working group within 60 days of taking office.
- Publish the actuarial framework and pricing model for transparent review.
- Pair the CCRP roll-out with reformed Prop 103 rate-review timelines that prevent abuse.
- Establish mitigation-credit standards in coordination with CAL FIRE and county fire marshals.