THE FIRE LINE: INSURANCE COSTS ARE SPIKING IN HIGH RISK ZONES
As wildfire seasons get longer and more destructive, the insurance market is rapidly adapting-and not always in ways that help property owners. The latest big signal? The California FAIR Plan is proposing an average rate increase of 35.8% to better account for the escalating wildfire risk.
For investors, home owners, and property managers operating in high-risk ZIP codes, this isn’t just a news headline; it’s a major financial pivot that needs immediate attention.
When the “Last Resort” Gets Pricey The FAIR Plan is California’s “Insurer of last resort”. Its whole job is to provide basic fire coverage when standard carriers refuse to offer terms because the risk is just too high. But with wildfire exposure now an intense, persistent threat across the state, even this safety net is starting to strain.
Some areas, especially those bordering the wildland-urban interface, will see increases far exceeding that average. This dramatic pricing shift isn’t arbitrary. It directly reflects the growing cost of reinsurance, climbing claims severity, and a necessary recalibration of actuarial models to truly reflect our current climate reality.
A NATIONAL TREND IS UNDERLINED
The proposed rate hike is more than just local California news. It underscores a worrying national trend: the increasing unaffordability of non-admitted and residual market insurance in catastrophe-prone regions.
For brokers and investors who rely on programs like FAIR to fill critical coverage gaps, the path forward is becoming much narrower and much costlier. As affordability erodes, a growing number of properties are falling into insurance limbo-too risky for standard carriers, yet priced out of the last-resort options. This growing gap threatens the insurability of investment properties and trust portfolios alike, particularly in regions facing compounding climate threats.
STRATEGIC MOVES FOR A HARDENING MARKET
Navigating this evolving risk landscape requires a proactive, portfolio-level mindset. Relying on blanket strategies just won’t cut it anymore. Investors need to:
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Reassess exposure across their entire portfolio, particularly within fire-prone geographies.
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Build in defensible space and mitigation strategies to boost property-level insurability.
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Explore specialty insurance solutions that can bundle coverage, simplify administration, and maintain better pricing efficiency.
At Roman Insurance Services, we focus on helping brokers and fiduciaries mitigate wildfire risk exposure through programs built for investor-owned and trust-held assets. Our Rental Program offers scalable protection for diversified property sets, while speeding up access to coverage in difficult markets.
Our underwriting model factors in things like geographic dispersion, construction type, and mitigation efforts-all of which help reduce reliance on those expensive last-resort markets and bring investment portfolios back into the standard insurance ecosystem whenever possible.
LOOKING AHEAD
The FAIR Plan’s proposed rate increases are just one piece of a much larger shift. Climate risk is fundamentally redrawing the boundaries of insurability in real estate, and reactive strategies are no longer going to cut it. Brokers, fiduciaries, and investors must stop thinking property-by-property and start adopting a portfolio-wide risk management strategy
Roman Insurance Services remains committed to supporting the real estate investment community with data-driven underwriting, tailored insurance solutions, and platforms designed to simplify these complex property risks.
For questions or more information contact Roman Insurance Services at (800) 304-3254
