The fires that ravaged residential areas in Los Angeles County, which likely began with the eruption of the Palisades fire on January 7 due to strong Santa Ana wind events, have killed at least twenty-five people, burned down upwards of ten thousand residences, and forced almost two hundred thousand people to evacuate. In the immediate aftermath of losing their homes, valuable belongings, precious keepsakes, and personal documents, however, thousands of families will not have time to mourn. Before picking up the pieces and starting over, they will have to spend weeks or months negotiating insurance settlements with companies that have been determined to provide increasingly inadequate coverage over the last several years — that is, if they’re lucky enough to still have a plan.

Since 2021, most of the largest home insurance providers have either stopped writing new policies for homes in high-fire-risk areas, decided not to renew thousands of existing policies, or raised costs by over 300 percent from one year to the next. In addition, a proposed class action lawsuit filed in San Diego County in December 2024 alleged that Liberty Mutual relied on demonstrably false pretenses to issue nonrenewals of plans that policyholders had paid diligently for decades. In other words, where insurance companies are unable to outright exit the market or push buyers away with exorbitantly high prices, they rely on fudging evidence of noncompliance to put the blame on homeowners.

In California, insurance firms benefit from a particularly benevolent insurance commissioner, Ricardo Lara, who has a history of accepting donations from lobbyists and passing draft regulations by them for approval before adopting them. As many private insurers fled California in the last five years, more and more homeowners have sought coverage from the California FAIR Plan, an insurer of last resort comprising insurance companies under the commissioner’s oversight. The influx has caused FAIR’s liabilities to balloon in the last year, even as it has been found in violation of hundreds of insurance code obligations. As investigative reporting in the Lever described, Lara graced insurance companies with a regulatory action last year that, in the event of a catastrophe that required the FAIR Plan to levy assessments, would allow them to pass on half of the liabilities up to $1 billion to their own policyholders.

Judging from the responses of major insurance companies over the last few years, one might assume that the industry has been struggling to keep up with increasing climate-related risks, giving them no choice but to withdraw their offerings and oblige people in high-risk zones across the country to turn to insurers of last resort. According to the National Association of Insurance Commissioners, however, the industry posted record profits in 2023 — despite that year’s climate-related weather disasters racking up a record $28 billion — and was poised to exceed those numbers in 2024.

It is absurd to claim that insurance companies have been blindsided by increasing climate risks. As consumer advocates have rightly pointed out, increasing annual premiums have sufficiently bolstered these companies such that they can certainly set aside some of their spoils to pay the claims of policyholders who have lost everything in the fires.

Insurance companies are not the only ones taking advantage of people’s desperation by joining the price-gouging frenzy. Tenants’ rights advocates have created a map documenting reported instances of illegal price gouging in the immediate aftermath of the fires, and the LA Tenants Union has called for an eviction moratorium and enforcement of price-gouging laws against predatory landlords. It is also relevant that real estate developers successfully lobbied to be able to develop in high-risk areas in California, putting more families at risk and passing on greater costs to working people.

The devastation in Los Angeles, as well as the damage in communities in North Carolina and other states that were considered safe from flood damage following Hurricanes Milton and Helene, has brought on a necessary reckoning regarding the ever-evolving climate risk landscape. Both catastrophes have seen more homes destroyed and higher costs levied on taxpayers due to the efforts of real estate and insurance lobbyists to undo pro-consumer regulations or impede efforts to collect detailed risk data.

The underlying issue, of course, is that the unequivocal factor increasing the fire and flood risks of so many housing zones across the country, over the last several decades, is climate change. Oil executives and other polluter profiteers have reaped the most material benefit from economic activity that has increased global temperatures and created the conditions that made these recent fires so destructive. Insurance sector regulations are desperately in need of reforms to bring them into the present-day risk landscape, but without any concerted efforts to mitigate climate change, they are unlikely to catch up anytime soon.