Fwd: California’s High-End Wildfire Risk
Loretta Lohman
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As wildfire risks grow in California, policies issued by the state’s insurer of last resort are increasingly concentrated in wealthy areas, like Lake Tahoe and Beverly Hills. We look at how that could bankrupt the program. Meanwhile, in Asia, geopolitics have turned the region’s dependence on oil, gas and coal into a weakness, experts said at the Bloomberg Sustainable Business Summit in Singapore. And if you’re in South Africa, beware of great white sharks — it’s peak season and no one is watching. Do you like reading our stories? Subscribe to Bloomberg.com for unlimited access to all climate and energy coverage. Luxury liabilityBy Todd Woody As California’s wildfire insurance crisis drives homeowners to the state’s insurer of last resort, wealthy areas such as Beverly Hills, Malibu and Bel Air make up an increasingly large portion of the liability exposure — a dynamic that experts fear could bankrupt the program and undermine the private market. Nine zip codes out of more than 1,700 in the state account for about 7% of the FAIR Plan’s liability exposure, or $44 billion as of September 2025, according to a Bloomberg News analysis of the latest available data. That’s a 135% increase in monetary exposure since 2022 for the insurer in those neighborhoods. Well-off communities as determined by median income and home values comprise five of the top 10 highest liability zip codes. A sixth is the mountain resort community of Lake Arrowhead, where about 60% of dwellings are second homes and FAIR exposure is $7 billion, the second highest in the state.  California is one of 34 US states that offer last-resort insurance plans. The Golden State stands out, though, for the magnitude of residential liability and the frequency and intensity of wildfires that increasingly push into urban areas. This month, the state’s largest utility, PG&E Corp, warned it would cut power in 10 counties as high temperatures and gusty winds raised fire threats. A March study from the University of California at Berkeley determined that the FAIR Plan’s exposure risk is “disproportionately tied to higher-income, high-asset communities.” That’s driven up costs for all FAIR policyholders with premium burdens falling “more heavily on middle-income households” even in moderate-risk areas. That means they’re effectively subsidizing wildfire losses for high-value homes. “It is a real challenge in terms of how to undo this escalation of liability that we’re seeing,” said Nancy Wallace, the paper’s author and a professor of finance and real estate at UC Berkeley’s Haas School of Business. A spokesperson for the FAIR Plan declined to comment.  A skyline
view of the Bel Air neighborhood in Los Angeles.
Bloomberg
By law, the FAIR Plan must accept any homeowner unable to obtain insurance in the private market, regardless of their property’s value. But Michael Soller, a spokesperson for the California Department of Insurance, noted that the insurance department limits FAIR liability for high-value homes by capping policy payouts at $3 million. That’s still too much, according to Michael Wara, director of the climate and energy policy program at Stanford University, noting the cap is four times the median California home value. Wara said one way to limit FAIR’s exposure risk is to exclude second homes from the plan and force those homeowners to seek coverage from lightly-regulated insurers in what is known as the “non-admitted” market, which has been expanding as climate change makes properties increasingly uninsurable. “If you can afford to have a house in Tahoe, then you should not be reliant on what is essentially a subsidy from the rest of the state for your homeowner’s insurance,” he said. Read
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Mega-mansion risk$9 billion FAIR Plan’s exposure from a single affluent Lake Tahoe zip code where about half of the dwellings are second homes Uneven exposure“As more risk accumulates in a small number of communities, a single disaster can generate significant losses and increase the likelihood of assessments that ultimately affect the broader insurance market.” Karen Collins Executive with the industry advocacy group American Property Casualty Insurance Association on the concentration of last-resort policies in wealthy enclaves Asia’s fuel importers exposed to volatilityBy David Stringer and Rebecca Choong Wilkins About 90% of Asia’s primary energy use still comes from oil, gas and coal. Rising demand, coupled with a lack of major new fuel discoveries, is likely to keep the region dependent on overseas supplies, Vandana Hari, founder of Singapore-based Vanda Insights, said. “There is a growing dependency on imports, and with that comes a dependency — or a vulnerability — to geopolitics,” she said at the Bloomberg Sustainable Business Summit in Singapore earlier today. “I think we are in a geopolitical flux, I think this is going to remain with us for decades, definitely years.” 
 Asia’s dependence on imported fossil fuels has come under renewed scrutiny after conflicts in the Middle East and the war in Ukraine exposed how geopolitical tensions can quickly disrupt energy supplies and drive up costs. That is strengthening the case for renewable energy, which can reduce reliance on imported fuels. While energy weaponization “has become unavoidable,” global trade in commodities will continue as long as there are producer nations with excess products to export, said Hari, who has monitored energy markets for at least 25 years. “So global commodity trade flow will not get fragmented as such, but we will have to manage the diplomacy network, in terms of how you create your energy security, the buffers and the diversification,” she added. Get
full coverage
It’s a wrapAsia’s reliance on fossil fuel imports will potentially keep nations exposed to global volatility in energy supplies for decades, according to a veteran observer of the region. Read all our stories from the Bloomberg Sustainable Business Summit in Singapore This week’s Zero episodeAndy Burnham has become the UK’s sixth prime minister in just 10 years. When it comes to energy and climate, Labour Party’s Burnham will inherit many of the same challenges of his predecessors: high energy prices, security of supply and an increasingly polarized debate over the UK’s ambitions to reach net zero. This week on Zero, Akshat Rathi sits down with Dale Vince, founder of Ecotricity and major donor to Labour, to ask, can a new UK government make energy cheap? Listen now, and subscribe on Apple, Spotify or YouTube to get new episodes of Zero every Thursday. More from GreenPhoto finish Great
white shark breaching at Seal Island, False Bay,
South Africa.
Photographer:
Chris Brunskill Ltd/Corbis News
Beware beachgoers. A dispute with local authorities means the waters shared by swimmers and great whites off Plettenberg Bay, one of South Africa’s most popular beach resorts, are going unmonitored during the peak shark season when the world’s biggest predatory fish move inshore to hunt seals. More from Bloomberg
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