
The Wall Street Journal recently reported that California wildfires are sweeping through America's wealthiest coastlines, resulting in direct economic losses exceeding $50 billion. The blaze has destroyed approximately 9,000 housing units, many of which are located in upscale communities where the median home price is as high as $3.1 million. Climate scientists warn that this could become the most devastating wildfire in history.
The enormous property losses not only create economic difficulties for residents but also pose a severe challenge to the insurance industry. JPMorgan estimates that the insurance payout for the fire could exceed $20 billion, and as the fire spreads, losses could climb further. However, many homeowners find themselves unable to claim compensation due to insurance companies withdrawing or not having coverage.
In recent years, as natural disasters have become more frequent, insurance companies have significantly reduced their business in high-risk areas. For instance, since last year, State Agricultural Insurance has canceled over 36,000 California home policies, stating it is unable to bear the continually increasing fire risk. Data from large insurers like Munich Re indicate that approximately 12% of American homeowners are uninsured, making economic recovery after fires more challenging.
The fragility of the insurance market also threatens the real estate industry and the broader financial system. With a large number of homes lacking insurance protection, the risk of a decline in real estate values increases, potentially triggering systemic issues similar to the 2008 financial crisis. A Senate report has highlighted that not only in California, but the rate of uninsured properties is also rising in Florida, Louisiana, and Texas.
Experts urge that the United States needs to quickly implement policies to address climate disasters while strengthening regulation of the insurance market to mitigate the current crisis and prevent similar disasters from having long-term economic impacts.

