"California Wildfires and Insurance Crisis: Insights from Karl Susman on Spectrum News"
Published Date: 01/16/2025
As flames tore through Los Angeles County in the Eaton and Palisades fires, entire neighborhoods were reduced to ash. Early estimates suggest that more than 12,000 homes and businesses were destroyed, and at least 25 lives were lost. For many Californians, the tragedy has reignited an urgent question: What happens when the insurance system itself is on fire?
In a candid interview with Spectrum News, insurance expert Karl Susman, President of Susman Insurance Services, offered a rare look behind the curtain of California’s embattled insurance market. Speaking both as a professional and as an evacuee himself, Susman shared insights into the evolving insurance landscape, the role of government intervention, and how new reforms might finally give the state a fighting chance to stabilize coverage for homeowners.
1. A Personal Perspective Amid Crisis
Susman’s appearance on Spectrum came just days after he and his own family were forced to evacuate their home in Brentwood.
“The family is everything,” he said. “As long as my family is safe, everything else we can deal with.”
That human element underscores a point often lost in policy discussions — that behind every insurance claim lies a family navigating loss, uncertainty, and recovery. Even for industry professionals, these fires are more than numbers on an actuarial chart; they’re lived experiences that shape how the system must evolve.
2. State Farm’s “Good News” — and the Law Behind It
Spectrum’s host, Giselle Fernandez, opened by noting what seemed to be a positive headline: State Farm had announced it would renew some homeowners’ policies in L.A. County, even for those previously slated for cancellation.
But Susman quickly clarified what was really happening.
“It sounds so altruistic,” he said, “but this wasn’t voluntary. The Department of Insurance sent out a bulletin telling every insurer in the affected zip codes — and even surrounding zip codes — that they could not non-renew policies for 12 months.”
In other words, this wasn’t an act of goodwill — it was a mandatory moratorium under California’s emergency insurance regulations.
The order also required carriers to reinstate any recently canceled policies at the same terms and price, “no questions asked.” A few hours after that directive was expanded to cover additional zip codes, State Farm issued its public statement.
While the move brought short-term relief to homeowners, Susman cautioned that it’s not a permanent fix. These moratoriums are stopgaps — temporary measures to prevent widespread coverage loss during a crisis.
3. The Housing Crunch and Illegal Price Gouging
One of the most immediate challenges facing displaced families isn’t just rebuilding — it’s finding a place to live.
In areas like the Pacific Palisades, where large single-family homes dominate the landscape, temporary housing is scarce. The result: skyrocketing rents and reports of landlords exploiting evacuees.
“We’re seeing 200%, 300%, even 600% increases,” Susman said. “And that’s completely illegal.”
He cited California Penal Code 396, which prohibits rent hikes above 10% following a declared natural disaster. Unfortunately, not everyone is following the rules.
“There are unsavory characters out there jacking up rents to levels that are completely inappropriate,” he warned.
It’s a stark reminder that the insurance crisis extends far beyond underwriting — it touches every part of California’s recovery ecosystem, from housing to construction to consumer protection.
4. A 35-Year-Old Framework Meets a 21st Century Disaster
California’s insurance laws have remained largely unchanged since 1988, when voters passed Proposition 103 — a consumer protection measure that required prior state approval for rate increases.
While well-intentioned, the law has become a straitjacket in the age of megafires.
“The insurance industry in California hasn’t been updated in 35 years,” Susman said.
But that’s finally changing. The Sustainable Insurance Strategy, a sweeping set of regulatory reforms finalized in December 2024, is giving insurers new tools to manage risk and stay solvent — just in time.
“They’d been working on these changes since September 2023,” Susman explained. “They were finalized literally weeks before this fire broke out. Thank goodness, because passing them during a catastrophe would have been impossible.”
The reforms mark the most significant overhaul of California insurance law in a generation.
5. What the Sustainable Insurance Strategy Actually Does
Susman broke down how the new rules work — and why they could be a game-changer for both insurers and policyholders:
- Allows modern catastrophe modeling.
Insurers can now use forward-looking data, not just historical losses, to set rates and plan coverage — crucial in an era of climate volatility. - Promotes “granular underwriting.”
Companies can evaluate risk more precisely, differentiating between properties based on their wildfire resilience rather than simply their ZIP code. - Rewards mitigation efforts.
Homeowners who install Class A roofs, ember-resistant vents, or maintain defensible space will now qualify for premium discounts. - Restores market participation.
By making it financially viable to write policies again, carriers like Allstate and State Farm may gradually return to high-risk regions instead of abandoning them.
“Once carriers write these big checks,” Susman said, “they’ll be able to come back with products that regulators can approve — and coverage will once again be available for residents.”
In short, the new framework attempts to balance consumer protection with actuarial reality — ensuring coverage remains accessible without driving insurers out of the state.
6. Understanding Why Non-Renewals Happened
For homeowners who lost coverage before the fires, anger toward insurers is understandable. Many felt betrayed, believing companies abandoned them when they needed protection most.
Susman offered a nuanced explanation:
“They saw the data. They knew this was a possibility — that’s why they were non-renewing the risk.”
In other words, carriers weren’t acting maliciously; they were responding to unsustainable loss projections under outdated pricing rules.
The hope now is that with the Sustainable Insurance Strategy in place, carriers can offer homeowners clear incentives to harden their properties and retain coverage — rather than pulling out entirely.
“With the new regulations, they can go to a consumer and say: here’s your price if you do nothing, and here’s your price if you make your home less likely to burn,” Susman explained.
7. Lessons from the “Survivor Homes”
Interestingly, not every property in the Palisades burned. Susman mentioned a handful of homes that withstood the fire while their neighbors were destroyed.
“The big brains are going to go in there and figure out why,” he said. “What was it about those properties that made them stay standing when everything else around them burned?”
This kind of forensic study — understanding how materials, landscaping, and building design affect survivability — could help shape future building codes and insurance underwriting alike.
“Everyone will end up being a ‘big brain,’” Susman joked, “because we’ll all have to protect our homes in the right way.”
8. The Path Forward: From Reaction to Resilience
The California insurance crisis didn’t emerge overnight, and it won’t be fixed overnight either. But for the first time in decades, there’s a sense of direction — and perhaps, hope.
The immediate moratoriums will prevent mass coverage loss during recovery. The new regulations will allow carriers to reprice risk and reenter the market. And studies of fire-resistant “survivor homes” may lead to more resilient communities statewide.
Still, Susman emphasized that real progress depends on shared responsibility — between regulators, insurers, and homeowners themselves.
“The industry can offer coverage,” he said. “But we as homeowners have to do our part to make our properties safer.”
9. Key Takeaways for Homeowners
As California rebuilds from yet another catastrophic fire season, Susman’s advice for homeowners is straightforward and practical:
- Stay insured, even if you’re on the FAIR Plan. Add a supplemental “Difference in Conditions” (DIC) policy for full protection.
- Document everything. Take photos and videos of your home and valuables for future claims.
- Invest in mitigation. Simple improvements can qualify you for premium discounts and improve your odds of survival.
- Watch for scams. Illegal rent gouging and contractor fraud spike after disasters — report suspicious activity to the Department of Insurance.
- Work with experienced agents. A knowledgeable broker can navigate multiple carriers and ensure you’re not over- or under-insured.
Conclusion: Rebuilding Smarter, Not Just Faster
California’s wildfire crisis has laid bare the fragility of the state’s insurance system — but also its capacity for reform. Thanks to new regulations, modernized underwriting, and growing public awareness, there’s finally a roadmap for recovery that doesn’t depend on bailouts or blame.
As Karl Susman’s Spectrum News interview made clear, the future of California insurance will depend on adaptation — from carriers, regulators, and homeowners alike.
For now, the flames may be out, but the work of rebuilding — and rethinking — has only just begun.
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