- In a press release, USAA shared that it received more than 3,500 claims related to the California wildfires, with 86% of claims receiving initial payments of more than $1 billion. The company projects that members' wildfire losses will reach $1.8 billion.

- In a press release, State Farm has shared that its subsidiary, State Farm General, is asking the California Department of Insurance (CDI) to immediately approve interim rate increases, including 22% average for homeowners.

As of Feb 1, State Farm General (Fire only) has received more than 8,700 claims and has already paid more than $1 billion to customers. "State Farm General will ultimately pay out significantly more, as collectively these fires will be the costliest disasters in the history of State Farm General," the insurer shared.

State Farm General asked the CDI to approve interim rate increases "to help avert a dire situation" for the more than 2.8 million policies issued by State Farm General, including 1 million State Farm General homeowners customers, and the insurance market in the state of California. State Farm General has had an outstanding filed rate increase pending since June 2024. Pending CDI approval, rate changes will be effective upon renewal after May 1, 2025.

Bottom Line: Over the last 9 years, the lack of alignment between price and risk led State Farm General to spend $1.26 for every $1 it collected in premium, resulting in over $5 billion in cumulative underwriting losses

While I don't doubt this is technically accurate, I wonder how they count reinsurance in their numbers? I'm betting this is gross losses, before their catastrophic coverage kicks in.

Hypothetically, say USAA or State Farm buys $500 million of coverage from Lloyds of London or somesuch for $15-20 million in annual premiums. They eventually will recover a net of $480 million to apply to their losses - - how is that factored in? Now granted, their premiums for the same coverage will go way up next year (maybe $50-75 million? in my silly example), but I'd just like to see the whole picture.

Either way, I'm certainly no expert in fire insurance, but it looks like consumers in California will have a bleak outlook for insurance affordability, with no real assurance that it won't get worse.

GREAT points, and I don't know the answers.