Among homeowners surveyed by the Insurance Research Council (IRC), 88 percent recognize that aerial imagery is a beneficial tool for insurers.
Nearly all respondents said they recognize the value of using satellite, drone, and aircraft images for early problem detection, claims processing, and hazard identification before costly damage occurs. Most also said they believe aerial imaging can lead to fairer pricing.
Key findings:
Nine out of 10 respondents said they see at least one benefit from aerial imagery’s use in insurance. More than half said it leads to fairer insurance pricing.
While 60 percent have some awareness that insurers use aerial imagery, 40 percent know little or nothing about it.
When homeowners are familiar with the use of aerial imagery for underwriting, they are nearly twice as likely to think it makes insurance pricing fairer.
Homeowners worry more about accuracy than privacy in the context of aerial imagery. Accuracy emerges as the top individual concern, with 31 percent citing it as their biggest worry, compared to 24 percent who cite privacy as their primary concern.
Education and transparency are key to acceptance of this technology, the survey found. Homeowners who were already familiar with aerial imagery applications were found to show consistently higher confidence levels, greater benefit recognition, and more positive sentiment across all insurance uses. Younger homeowners also demonstrated greater acceptance and higher confidence in the technology’s accuracy.
“Consumers see value in aerial imagery when they understand how it’s used in insurance,” said IRC President Pat Schmid. “Efforts to increase transparency and consumer knowledge can bridge the confidence gap, improve customer trust, and help homeowners realize the benefits of faster claims, fairer pricing, and better risk prevention.”
The IRC, like Triple-I, is an affiliate of The Institutes.
Amid a summer full of deadly fires and storm-related flooding, the Trump Administration appears to be rolling back some of the spending cuts imposed upon the National Weather Service (NWS) by the Department of Government Efficiency (DOGE).
The National Oceanic and Atmospheric Administration (NOAA) – of which NWS is a part – announced at an internal all-hands meeting earlier this month that they will hire 450 meteorologists, hydrologists, and radar technicians. CNN reported the announcement, citing an unnamed NOAA official. In jointly timed press releases, Congressmen Mike Flood and Eric Sorensen (D-Ill.) and Mike Flood (R-Neb.) acknowledged the planned hirings.
While the decision is welcome news, both congressmen continued to urge their colleagues to pass their bipartisan Weather Workforce Improvement Act to ensure these positions will remain permanent and not be subject to any future reductions.
“For months, Congressman Flood and I have been fighting to get NOAA and NWS employees the support they need in the face of cuts to staff and funding,” Sorenson said. “Hundreds of unfilled positions have caused NWS offices across the country to cancel weather balloon launches, forgo overnight staffing, and force remaining meteorologists to overwork themselves.”
“For decades the National Weather Service has helped keep our communities safe with accurate and timely forecasts,” said Flood, adding that the NOAA announcement “sends a message that they’re focused on strengthening the NWS for years to come.”
NOAA and FEMA cuts raised fears
It’s not just the NOAA and NWS cuts that have raised concerns. On April 4, 2025, the Federal Emergency Management Agency (FEMA) announced that it would be ending its Building Resilient Infrastructure and Communities (BRIC) program and cancel all BRIC applications from fiscal years 2020-2023. Congress established BRIC through the Disaster Recovery Reform Act of 2018 to ensure a stable funding source to support mitigation projects annually. The program has allocated more than $5 billion for investment in mitigation projects to alleviate human suffering and avoid economic losses from floods, wildfires, and other disasters.
At the time, Chad Berginnis, executive director of the Association of State Floodplain Managers (ASFPM), called the decision to terminate BRIC “beyond reckless.”
“Although ASFPM has had some qualms about how FEMA’s BRIC program was implemented, it was still a cornerstone of our nation’s hazard mitigation strategy, and the agency has worked to make improvements each year,” Berginnis said. “Eliminating it entirely — mid-award cycle, no less — defies common sense.”
Resilience investment is key to long-term insurance availability and affordability. Average insured catastrophe losses have been on the rise for decades, reflecting a combination of climate-related factors and demographic trends as more people have moved into harm’s way.
Efforts have been made to save BRIC, and a U.S. District Judge in Boston recently granted a preliminary injunction sought by 20 Democrat-led states while their lawsuit over the funding moves ahead. Judge Richard G. Stearns ruled the Trump Administration cannot reallocate $4 billion meant to help communities protect against natural disasters.
In his ruling, Stearns said he was not convinced Congress had given FEMA any discretion to redirect the funds. The states had also shown that the “balance of hardship and public interest” was in their favor.
“There is an inherent public interest in ensuring that the government follows the law, and the potential hardship accruing to the States from the funds being repurposed is great,” Stearns wrote. “The BRIC program is designed to protect against natural disasters and save lives.”
Devastating flooding in central Texas over the July 4, 2025, weekend highlighted several aspects of the state’s risk profile that also are relevant to the rest of the country, according to the latest Triple-I Issues Brief. One is the rising incidence of severe inland flooding related to tropical storms.
Tropical Storm Barry made landfall in Mexico on June 29 and weakened quickly, but its remnant moisture drifted northward into Texas, according to Dr. Phil Klotzbach, a research scientist in the Department of Atmospheric Science at Colorado State University and a Triple-I non-resident scholar.
“A slow-moving low-pressure area developed and helped bring up the moisture-rich air rom Barry and concentrated it over the Hill Country of central Texas,” Klotzbach said. “The soil was also extremely hard from prior drought conditions, which exacerbated the flash flooding that occurred.”
Such flooding far from landfall has become more frequent and severe in recent years. In Texas – as in much of the United States, particularly far from the coasts – few homeowners have flood insurance. Many believe flood damage is covered by their homeowners’ or renters’ insurance. Others believe the coverage is not worth buying if their mortgage lender doesn’t require it. In Kerr County, where much of the July 4 flooding took place, flood insurance take-up rates through the National Flood Insurance Program (NFIP) were 2.5 percent.
Convective storms, fires, and freezes
But tropical storms aren’t always the impetus for flooding. In July 2023, a series of intense thunderstorms resulted in heavy rainfall, deadly flash floods, and severe river flooding in eastern Kentucky and central Appalachia. The conditions that lead to such severe convective storms also are prevalent in Texas.
Severe convective storms are a growing source of losses for property/casualty insurers. According to Gallagher Re, severe convective storm events in 2023 and 2024 “have cost global insurers a remarkable US$143 billion, of which US$120 billion occurred in the U.S. alone.”
Given its aridity and winds, it should be no surprise that Texas is highly subject to wildfire – but the state also has been increasingly prone to severe winter storms and debilitating freezes. On Valentine’s Day 2021, snow fell across most of Texas, accumulating as temperatures stayed below freezing and precipitation continued through the night. A catastrophic failure of the state’s independent electric grid exacerbated these conditions as snow and ice shut down roads and many homes suffered pipe bursts and multiple days without power.
Texas’s 2021 experience illustrates how grid instability can act as a “risk multiplier” for natural disasters. The entire U.S. electric power grid is increasingly vulnerable as the infrastructure ages and proliferating AI data centers increase demand.
Need for data and collaboration
The severe damage and loss of life from the July 4 flooding have naturally raised the question of whether the Trump Administration’s reductions in National Weather Service staffing contributed to the high human cost of this event. While it is hard to say with certainty, these cuts have affected how NWS works – for example, in its use of weather balloons to monitor weather. As early as April, staffing data gathered by NWS indicated that field offices were “critically understaffed”.
In June, panelists at Triple-I’s Joint Industry Forum expressed concern about the impact of the federal cuts on weather monitoring and modeling, as well as programs to help communities adequately prepare for and recover from disasters. Triple-I has published extensively on the need for insurers to shift from exclusively focusing on repairing and replacing property to predicting events and preventing damage.
Collective action at all levels – individual, commercial, and government – is needed to mitigate risks, build resilience, and reduce fraud and legal system abuse. Triple-I and its members are committed to fostering such action and regularly provide data and analysis to inform the necessary conversations.
Analysis based on granular, cutting-edge data is essential to staying ahead in our rapidly shifting risk landscape. During Triple-I’s Joint Industry Forum in Chicago, two “Risk Take” presenters dove deep into the innovative data initiatives they engaged in to help turn these challenges into new opportunities for insurers.
Balancing consumer needs
With natural catastrophe frequency and supply chain uncertainty on the rise, so are home maintenance costs. Estimated to exceed $10,000 annually in 2024 – at a 5.9 percent year-over-year increase – home maintenance further weighs against the mounting costs of premium rates and property taxes across the U.S., leading many homeowners to forgo investing in at-home risk mitigation like smart home telematics.
“Across the providers we’ve talked to, adoption of telematics falls somewhere between the single digits,” said presenter James Bilodeau, CEO and founder of PreFix Inc. “The reason is simple: the value proposition of what we would like homeowners to do isn’t important enough compared to what homeowners actually need.”
For Bilodeau, the solution is also simple: combine advanced technology with routine preventative maintenance. By providing personalized, year-round home repair, Bilodeau’s Texas-based firm aims to mitigate losses while gathering unique primary data on the properties they service. Insurers can use this data to develop telematics technology and more accurately price the associated risks.
Such data collection “creates a flywheel in which we help our partners delight their customers with exceptional service and hit directly at affordability issues, both with home maintenance and in premium reduction,” Bilodeau said.
After a successful pilot program, USAA expanded its partnership with the company to offer discounted maintenance services to members who sign up for PreFix. Noting that the company is pursuing partnerships with other major insurers, Bilodeau highlighted that industry collaboration is crucial to not only facilitate more refined coverage but to lower the cost of entry to enhancing resilience.
Emerging public safety risks
An eightfold increase in New York City fire incidents between 2019 and 2023 correlates strongly with the growing popularity of e-mobility devices, according to a joint report by UL Standards & Engagement (ULSE) and Oxford Economics that is based in part on Triple-I data.
Presenting on the report, ULSE Director of Insights Sayon Deb explained how lithium-ion battery fires linked to e-bikes and scooters became a mainstream risk for COVID-era urban environments, due in part to the booming online food and grocery delivery market.
“Nearly $519 million worth of damages were caused in just four years from structural property damage, injuries, and loss of life,” Deb said, pointing out that this figure does not account for “the additional cost of communal fear, in terms of fires happening across the hallway from you, and also the loss in economic opportunities and the community toll that it takes as we respond to these fires.”
Inadequate public safety awareness, paired with the easy availability of uncertified devices, helped fuel the crisis. Beyond overusing or incorrectly charging the devices, e-mobility users often left them in dangerous locations, with “66 percent of those who charge at home charging their devices near their exit,” Deb explained – effectively “blocking your exit from your home in the event of a fire.”
E-mobility regulations vary wildly by state. Though New York City regulations passed in 2023 show progress, ULSE recommends more proactive public outreach, safety standard enforcement, and incident reporting to better track e-mobility risk data.
“The better the data we collect, the better we can understand where, how, and why these battery fires occur, so that we can prevent future fires from happening,” Deb concluded.
By Loretta Worters, Vice President, Media Relations, Triple-I
Lightning-related homeowners’ insurance claims totaled $1.04 billion in 2024, a 16.5 percent decrease from 2023, according to new data from the Insurance Information Institute and State Farm, the largest writer of homeowners’ insurance in the United States. The number of lightning-caused claims also fell significantly, dropping 21.5 percent, to 55,537, the lowest level recorded since before 2017.
More than half of all claims came from the top 10 states, with Florida, Texas, and California leading the country in lightning-related property losses.
“Fewer claims and a decline in severity indicate increased awareness and improved mitigation,” said Sean Kevelighan, CEO, Triple-I. “Nonetheless, lightning remains a significant threat to property and safety, particularly during storm season.”
Key lightning claim stats for 2024
Total number of claims: 55,537 (down from 70,787 in 2023)
Total claims value: $1.04 billion (down from $1.24 billion)
National average cost per claim: $18,641
Highest state average: $38,558 in Texas
Top three states by lightning losses
Florida – 4,780 claims, $113M in damages
Texas – 4,369 claims, $168M in damages
California – 4,005 claims, $75M in damages
“Lightning remains a costly and unpredictable threat, with ground surges causing nearly half of all claims,” said Michal Brower of State Farm. “These events can cause extensive damage to electrical systems, appliances, and even structural issues. The damage underscores the critical need for homeowners to be aware of the risks, invest in protective measures, and stay prepared, especially in high-risk regions where lightning strikes are most frequent and damaging.”
Lightning strikes can cause more than just a power outage. Common impacts include:
Fires in attics, roofs, or walls
Power surges that destroy electronics and appliances
Structural damage
Injury or even death
How to Stay Protected
Homeowners can protect their families and property by following a few guidelines:
Install whole-home surge protection and unplug devices during storms;
Consider a certified lightning protection system;
Check your homeowners’ insurance policy for lightning and surge-related coverage; and
Stay indoors and avoid wired devices during thunderstorms.
Damage caused by lightning, such as fire, is covered by standard homeowners’ insurance policies. Some policies provide coverage for power surges that are the direct result of a lightning strike.
The Lightning Protection Institute (LPI) notes that lightning strikes can occur at an astonishing rate of 100 times per second.
“Whether it’s a family home or a mission-critical facility, no property is immune to lightning,” said Tim Harger, Executive Director at LPI, whose organization provides resources for the design, installation, and inspection of lightning protection systems. “The most effective time to prevent lightning damage is before a storm. A lightning risk assessment paired with a professionally installed protection system can make all the difference in keeping people safe and operations uninterrupted.”
While lightning-related claims may be down, the risk is still very real, especially in high-strike areas like Florida, Texas, and California. Taking preventive steps now can reduce exposure to costly damage later.
Identifying key risk trends amid an increasingly complex risk landscape was a dominant theme throughout Triple-I’s 2025 Joint Industry Forum – particularly during the panel spotlighting some of the insurance industry’s C-suite leaders.
Moderated by CNBC correspondent Contessa Brewer, the panel consisted of:
J. Powell Brown, president and CEO of Brown & Brown Inc.;
John J. Marchioni, chairman, president, and CEO of Selective Insurance Group;
Susan Rivera, CEO of Tokio Marine HCC (TMHCC); and
Rohit Verma, president and CEO of Crawford & Co.
Their discussion provided insight into how insurers can transform these uncertainties into opportunities for business development and for cultivating deeper connections with consumers.
Recouping policyholder trust
Given the volatility of the current risk environment – exacerbated by various ongoing geopolitical conflicts and the rising frequency and severity of natural catastrophes – it is more imperative than ever to reaffirm the intrinsic human element of insurance, the panelists agreed.
“That’s one of the most underappreciated aspects of our industry,” Marchioni said. “We make communities safer and put people’s lives and businesses back together after an unexpected loss. Being the calming force when you have unsettling events like this happen around the world is a big part of what we do.”
Yet prevailing public perception continues to indicate otherwise, even as insurers report repeated losses or nominal profits compared to other industries.
“The insurance industry may be the only industry where record profits are a problem,” CNBC’s Brewer added, because consumers tend to “not care whether it’s coming from your investments, or whether it’s coming from your underwriting business or your reinsurance. They just hear that you’re making record profits.”
Brown noted that consumer mistrust derives, in part, from “a very active plaintiffs’ bar,” which the American Tort Reform Association estimates spent over $2.5 billion for nearly 27 million ads across the United States last year. He further discussed how, though the average homeowners’ insurance premium rate in Florida will increase this year, his home state has enjoyed far more stable rates after tort reforms eased litigation costs on insurers.
Previous research by the Insurance Research Council (IRC) – like Triple-I, an affiliate of the Institutes – showed that most consumers perceive the link between attorney advertising and higher insurance costs. Crawford’s Verma, however, emphasized that this awareness does not necessarily translate into consumers understanding their own agency.
“It’s easier for homeowners to understand how the weather impacts potential losses and the fact that weather patterns have changed,” Verma said. “But when it comes to [legal system abuse], I don’t think that connection is as well understood.”
Reflecting on a record high in nuclear verdicts last year, Rivera suggested insurers must reconfigure how they communicate legal system abuse to consumers.
“Where are those hospital professional liability verdicts going to go?” he said. “They’re going to go back into the cost of health care at the end of the day.”
Leading the AI charge
Maintaining consumer centricity while implementing or experimenting with technological innovations – especially generative AI – was a unifying objective for all the panelists.
“We look at AI as an enabler,” Brown said, “so we can put teammates in a position to spend more time with customers, which is the most important thing.”
For Tokio Marine’s Rivera, AI “ultimately helps all of our insureds” by boosting operational efficiency while reducing operational costs, as well as facilitating more proactive risk management than ever before. A growing percentage of insurance executives appear to agree, as generative AI models continue to expedite data processing across the insurance value chain, reshaping underwriting, pricing, claims, and customer service.
Such efficiency, paired with the potential for improved decision-making, is crucial “in our dramatically changing environment,” Marchioni stressed.
“We have thousands of claims every day,” he said. “Thinking about lawsuit abuse as a backdrop – a claims adjuster, every day, has to make decisions regarding, ‘Do I settle this claim based on injuries or venue? What’s the value of the injury and of the claim? Who’s the plaintiffs’ attorney?’ These tools give more refined information so your knowledge workers can make better, more timely decisions.”
Generative AI fails, however, when base datasets are insufficient, outdated, or inaccurate, Brown pointed out. Training AI models uncritically can lead to outputs containing false and/or nonsensical information, commonly known as “hallucinations”.
At their current capacity, at least, AI models cannot draw the kinds of salient conclusions that adjustors and underwriters can, meaning AI could “change the way we work, but it’s not going to replace the jobs,” Verma said.
Though they do not currently exist in the United States at the federal level, AI regulations have already been introduced in some states, following a comprehensive AI Act enacted last year in Europe. With more legislation on the horizon, insurers must help lead these conversations to ensure that AI regulations suit the complex needs of insurance, without hindering the industry’s commitments to equity and security.
A 2024 report by Triple-I and SAS, a global leader in data and AI, centers the insurance industry’s role in guiding conversations around ethical AI implementation on a global, multi-sector scale, given insurers’ unique expertise in analyzing and preserving data integrity.
Insurance industry executives and thought leaders gathered yesterday for Triple-I’s Joint Industry Forum (JIF) in Chicago to discuss the trends, economics, geopolitics, and policy influencing the market today, as well as ways to navigate these complexities while focusing on making their products affordable and available for consumers.
Triple-I CEO Sean Kevelighan in his opening remarks, noted that effective risk management depends on collaboration across stakeholder groups, as interconnected perils “present a community problem, not just an industry problem.”
JIF keynote speaker Louisiana Insurance Commissioner Tim Temple said facilitating community resilience planning is a top priority for the National Association of Insurance Commissioners (NAIC). The NAIC’s 2025 initiative – “Securing Tomorrow: Advancing State-Based Regulation” – aims to improve disaster mitigation and recovery by consolidating “the collective expertise of experienced state regulators from across the country, who can share real-time insights and proven strategies,” Temple said.
Among the initiative’s goals is aggregating more data from insurers to better understand challenges to affordability and availability on state levels, which the NAIC can then translate into actionable policy proposals. Such data calls, Temple said, help regulators, legislators, and policyholders focus on improving the cost drivers of insurance rates.
Louisiana has consistently been among the least affordable states for homeowners and auto insurance, according to the Insurance Research Council (IRC), in part because of its reputation for being plaintiff-friendly in civil litigation. Significant tort legislation has been approved in the state, but resistance to reform remains a challenge.
Getting to the roots of high premiums
After a recent data call in his home state, Temple told the JIF audience, “For the first time in Louisiana, we’re not talking about only premiums. We’re talking about why premiums are where they are.”
A critical lack of transparency surrounding cost drivers persists, however. Temple criticized the National Flood Insurance Program’s Risk Rating 2.0 reforms for not publicly disclosing more information “for individuals and communities to identify and address factors driving up their premiums,” such as “whether increased rates take into account levee systems, pump stations, and other things designed to help mitigate against floods.”
Conversely, government programs like Strengthen Alabama Homes – and the numerous programs it inspired, including in Louisiana – have demonstrated success in communicating the benefits of resilience investments for consumers and policymakers.
“We’re seeing major positive results after just a few short years,” Temple said, noting that, since early 2024, over 5,000 homeowners not chosen for Louisiana’s grant program still decided to invest in the same hazard mitigation, as they may still qualify for the corresponding state-mandated insurance discounts.
“As natural disasters become more frequent and severe, state regulators will continue to drive forward common-sense policies that protect consumers and ensure that insurance remains available and reliable for at-risk communities,” Temple concluded. Developing the database required for such policies is a necessary first step.
Keep an eye on the Triple-I Blog for further JIF coverage.
Advertising is one of the most common methods companies use to sell their products and services and influence public perceptions. While the issue brief doesn’t argue that general advertising or filing for due process is problematic, it does offer a risk management-based lens for viewing how aggressive attorney advertising campaigns can fuel costs associated with settling claims.
Key Findings
Legal service providers spent $2.5 billion on 26.9 million ads across the United States.
Research suggests that legal advertising increases the number of plaintiffs in multidistrict litigation (MDL), which are large lawsuits consisting of multiple civil cases involving one or more common questions of fact but pending in different districts.
Product liability cases, which accounted for 38 percent of pending MDLs as of August 2023, emerged as the single largest category of MDLs, while other case types have decreased from 2012 to 2022.
The third-party litigation funding market, with an estimated size of $16 billion, is a likely resource for advertising budgets for mass torts; however, 12 states and two jurisdictions have enacted or are considering disclosure requirements.
Ads for legal services and lawsuits saturate all channels of communication – public billboards, radio and television broadcasts, and social media – dangling the lure of a financial windfall. Legal services marketing isn’t uniquely used for mass litigation cases. Nonetheless, it is overall geared to recruit as many lawsuit filers as possible. Therefore, aggressive advertising for legal services introduces the risk of fueling higher claim costs via problematic litigation.
These advertisements often employ an exaggerated sense of urgency, urging the target audience to take immediate legal action without considering alternative options for resolution. These ads may also often overpromise results by implying guaranteed windfalls (i.e., “We’ll get you your money’’), creating unrealistic expectations for plaintiffs and, thus, potentially impacting the time to settle. Additionally, when ads mention a particular product or brand, attorneys communicate plaintiff-biased information to potential jurors. In essence, a juror may recall seeing a flood of advertisements about the product and think, “Where there’s smoke, there must be fire.”
The brief focuses on MDLs because these are complex, huge, and slow-paced cases that may sometimes involve hundreds, even thousands of individual lawsuits. Therefore, these cases inherently carry the risk of driving up legal costs. Also, the large number of plaintiffs introduces the risk that questionable claims might slip into the lawsuit. For example, a particular product may have indeed caused harm to some, but not all, of the plaintiffs who used it.
Pummeling the world with ads can be expensive. Enter the third-party litigation funding (TPLF) market, which, despite tighter capital controls in recent years, grew to $16 billion in 2024, up from $15.2 billion in 2023. TPLF offers discretionary funding to the litigation industry, which can, in turn, use the money to fuel more lawsuits seeking large settlements — a boon for the firms and the funder. The brief outlines how several states and jurisdictions are moving to create transparency around TPLF involvement.
Practices that foster unnecessary or drawn-out litigation are among several hard-to-measure forces that can shift loss ratios for insurers and disrupt forecasts, making cost management more challenging. Ultimately, the cost is passed on to consumers, adversely impacting coverage affordability and availability. Triple-I is committed to advancing conversations with business leaders, government regulators, consumers, and other stakeholders to attack the risk crisis and chart a path forward.
Read the issue brief to find out more about how attorney advertising can contribute to legal system abuse. To join the discussion, register for JIF 2025. Follow our blog to learn more about trends in insurance affordability and availability across the property/casualty market.
Two lawsuits filed in Los Angeles claim major California insurers colluded illegally to impede coverage in wildfire-prone areas, forcing homeowners into the state’s last-resort FAIR Plan. Accusing carriers of violating antitrust and unfair competition laws, the two suits exemplify an ongoing disconnect between public and insurer perceptions of insurance market dynamics, exacerbated by legislators’ resistance to accommodating the state’s evolving risk profile.
An untenable situation
Both suits claim the insurers conspired to “suddenly and simultaneously” drop existing policies and cease writing new ones in high-risk communities, deliberately pushing consumers into the FAIR Plan. Left underinsured by the FAIR Plan, the plaintiffs argue they were wrongfully denied “coverage that they were ready, willing, and able to purchase to ensure that they could recover after a disaster,” Michael J. Bidart, who represents homeowners in one of the cases, said in a statement.
Established in response to the 1965 Watts Rebellion, the California FAIR Plan provides an insurance option for homeowners unable to purchase from the traditional market. Though FAIR Plans offer less coverage for a higher premium, they cover properties where insurance protection would otherwise not exist. California law requires licensed property insurers to contribute to the FAIR Plan insurance pool to conduct any business within the state, meaning they share the risks associated with those properties.
Intended as a temporary solution until homeowners can secure policies elsewhere, the FAIR Plan has become overwhelmed in recent years as more insurers pull back from the market. As of December 2024, the FAIR plan’s exposure was $529 billion – a 15 percent increase since September 2024 (the prior fiscal year end) and a 217 percent increase since fiscal year end 2021. In 2025, that exposure will increase further as FAIR begins offering higher commercial coverage for farmers, homebuilders, and other business owners.
With a policyholder count that has more than doubled since 2020, the FAIR Plan faces an estimated $4 billion total loss from the January fires alone.
Out of touch regulations
Homeowners are understandably frustrated with dwindling coverage availability, which currently afflicts many other disaster-prone states. Supply-chain and inflationary pressures, which could intensify under oncoming U.S. tariff policies, help fuel the crisis. But California’s problems stem largely from an antiquated regulatory measure that severely constrains insurers’ ability to manage and price risk effectively.
Despite a global rise in natural catastrophe frequency and severity, regulators have applied the 1988 measure, Proposition 103, in ways that bar insurers from using advanced modeling technologies to price prospectively, requiring them to price based only on historical data. It also blocks insurers from incorporating reinsurance costs into their prices, forcing them to pay for these costs from policyholder surplus and/or reduce their presence in the state.
Insurers must adjust their risk appetite to reflect these constraints, as they cannot profitably underwrite otherwise. Underwriting profitability is essential to maintain policyholder surplus. Regulators require insurers to maintain policyholder surplus at levels that ensure that every policyholder is adequately protected.
Restricting insurers’ use of prospective data, however, inhibits risk-based pricing and weakens policyholder surplus, facilitating policy nonrenewals and, in serious cases, insolvencies.
Insurance Commissioner Ricardo Lara implemented a Sustainable Insurance Strategy to mitigate these trends, including a new measure that authorizes insurers to use catastrophe modeling if they agree to offer coverage in wildfire-prone areas. The strategy has garnered criticism from legislators and consumer groups, one of whom is suing Lara and the California Department of Insurance over a 2024 policy aimed at expediting insurance market recovery after an extreme disaster.
“Insurers are committed to helping Californians recover and rebuild from the devastating Southern California wildfires,” Denni Ritter, the American Property Casualty Insurance Association’s department vice president for state government relations, said in a statement about the suit. “Insurers have already paid tens of billions in claims and contributed more than $500 million to support the FAIR Plan’s solvency – even though they do not collect premiums from FAIR Plan policyholders.”
A call for collective action
Litigation prolongs – it does not alleviate – California’s risk crisis. Government has a crucial role to play in addressing it, from adopting smarter land-use planning regulations to investing in long-term resilience solutions.
For instance, Dixon Trail, a San Diego County subdivision dubbed the country’s first “wildfire resilient neighborhood,” models the Insurance Institute for Business & Home Safety (IBHS) standards for wildfire preparedness, but not at a cost attainable to most communities, and few local governments incentivize them. Launched by state legislature in 2019, the California Wildfire Mitigation Program is on track to retrofit some 2,000 houses along these guidelines, with the goal of solving how to fortify homes more quickly and inexpensively. Funded primarily by FEMA’s Hazard Mitigation Assistance Grant program, the pilot has thus far avoided the same cuts befalling FEMA’s sister programs under the Trump Administration.
Regardless of what legislators do, California homeowners’ insurance premiums will need to rise. The state’s current home and auto rates are below average as a percentage of median household income, reflecting a combination of the increased climate risk and of the regulatory limitations preventing insurers from setting actuarially sound rates. Insurance availability will not improve if these rates persist.
To quote Gabriel Sanchez, spokesperson for the state’s Department of Insurance: “Californians deserve a system that works – one where decisions are made openly, rates reflect real risk, and no one is left without options.” Insurers do not wield absolute control over that system, and neither do legislators, regulators, consumer advocates, or any other singular group. Confronting the root causes of these issues – i.e., the risks – rather than the symptoms is the only path towards systemic change.
By Loretta L. Worters, Vice President of Media Relations, Triple-I
When Karla Scott first entered the insurance industry, she didn’t set out with a grand plan to become a leader in marine underwriting.
“I fell into it,” she admits. Starting at a brokerage firm focused on logistics insurance, she quickly discovered a passion for global trade and cargo underwriting.
“It’s different every day,” says Scott, who is global logistics product leader and senior managing director, Ocean Marine, The Hartford. She joined the company after The Hartford acquired Navigators in 2019.
“The technical work keeps my skills sharp, while the camaraderie and shared purpose offer personal and professional fulfillment.”
– Karla Scott
Scott works with clients, agents, and brokers around the world to ensure that businesses have the protection they need through the product’s entire supply-chain life cycle. Her team insures raw materials and finished goods that are transported on containerships, planes, trains, and trucks. From geopolitics to commodity shifts, it’s an ever-evolving, complex industry that demands constant awareness and adaptation.
Now, with 24 years in marine insurance, Scott reflects on a career shaped by resilience, strong mentorship, and a deep commitment to community. Her journey underscores both the opportunities and challenges faced by women in a traditionally male-dominated field.
“Disrupting trade with…China, Canada, or Mexico would affect cost and the availability of insurance coverage.”
– Karla Scott
A Sea Change for Women
“Fifteen years ago, I sat at a table with 35 industry leaders and was the only woman,” Scott says. “But progress is happening. While marine insurance remains a niche within the broader insurance world, more women are entering the field and rising into leadership roles.”
There continues to be a gender pay gap and lack of career advancement opportunities, but Scott says “part of the reason, frankly, is that women tend not to self-advocate. It’s critical in the marine insurance space to promote yourself, but women often feel uncomfortable doing that. Self-advocacy is not boastfulness. No one is going to put you in the spotlight unless you step into it. Those are the skills we need to teach women coming up in this business.”
Being a woman on the West Coast in an East Coast-dominated industry meant navigating additional hurdles.
“There’s a current you swim against,” she says.
Overcoming Barriers
Support from forward-thinking male mentors and advisors helped her stay the course.
“I am indebted to three mentors who presented different strengths,” Scott says. “I learned how to manage people, to motivate people, technical skills, how important your reputation is in this industry, and how to push hard and be aggressive in certain situations and not aggressive in other situations.”
She also candidly addresses the internal battles many women face — imposter syndrome.
“I’ve experienced it myself and have reached out to my mentors, who are great at listening to my frustrations,” she says. “Having a strong network can help you work through those issues. Now that I’m on the other side, I’m pushing my mentees through those obstacles, helping them find their voice and teaching them to self-advocate—skills critical to closing the gender pay gap.”
The Power of Community
Scott’s involvement with the American Institute of Marine Underwriters (AIMU) and the Board of Marine Underwriters in San Francisco has been instrumental in her career. She has served as president of the latter twice and speaks passionately about the importance of collaboration in the insurance industry.
“One of the most unique parts of marine insurance is that we work in partnership with competitors to solve industry problems,” she says. “The technical work keeps my skills sharp, while the camaraderie and shared purpose offer personal and professional fulfillment.”
Trade Tensions and Industry Impacts
As global trade faces increasing scrutiny and tariff battles, Scott is already seeing the effects.
“Clients are canceling freight contracts, and volumes are dropping,” she says. “The result means lower trade volume, higher valuation of goods, and potential inflationary cycles may hit consumers hard.”
She points out that the lack of federal stimulus (unlike during the pandemic) leaves little room for economic cushioning.
“It’s a ‘hold your breath’ kind of moment,” Scott says.
Cargo theft is another growing concern.
“It spikes when inflation rises,” Scott notes, pointing out how easy it has become to resell stolen goods on platforms like Amazon and eBay.
Talk of reshoring manufacturing often overlooks the complexity of global trade.
“You can’t flip a light switch and manufacture everything in the U.S.,” she explains. “Machinery to build those goods often comes from Germany or Japan.
“Disrupting trade with top partners like China, Canada, or Mexico would significantly affect both cost and the availability of insurance coverage,” Scott says. “If consumer confidence drops and trade volumes fall, insurance demand will, too.”
Scott also highlights a deeper economic risk: the potential erosion of the U.S. dollar’s dominance in global trade. “If that shifts, the American economy could face even greater challenges.”
