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CNN
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Allstate Insurance says it will pay a $1.1 billion bill that was caused by the wildfire that swept Southern California in January.
While expected payments are important, Allstate said Wednesday that it could partially limit losses by pulling back from the California market. Many insurance companies, including Allstate, have cancelled homeowners’ policies in many parts of California due to the growing threat of wildfires.
AllState’s liability is a small portion of the total insurance claims from the California fire in January. It is expected to come from 16,600 properties. Corelogic, a research firm that tracks costs, says that catastrophes like fires and hurricanes.
The company released its claims figures late Wednesday along with its fourth quarter revenue report, although fires were not part of those financial results. Allstate recorded a profit of $2.1 billion in the fourth quarter. This is a 34% increase from the previous year, bringing adjusted profits to $4.9 billion for 2024. The catastrophe reestimates Hurricane Helen’s costs in September, despite claiming a $315 million loss related to Hurricane Milton in the fourth quarter.
Homeowners across California will see homeowners’ premiums climb in the wake of the fire.
Earlier this week, California’s largest insurance provider, state farm, asked homeowners to raise emergency interim rates by an average of 22%, citing “disastrous” financial situations from the fire. State Farm has received more than 8,700 bills and has paid over $1 billion to its customers. This is the number that companies know to increase, he said in a filing with the state insurance regulator.
Additionally, insurance companies can now use fire-related costs as justification for demand for increased interest rates.
For example, a California fair plan — a state-made insurer for homeowners who cannot obtain fire insurance from traditional insurers — is expected to make claims far beyond their assets. You can collect evaluations from other insurance companies in your state to pay these claims. Insurance companies will be able to consider the costs of a California fair assessment when seeking higher fees statewide.
You can also use the cost of reinsurance as part of your state fee calculation. In the past, the amount paid by insurance companies for reinsurance was not a fee calculation.
