When the flames subside and the smoke clears, California is left facing what experts now call the most expensive disaster in U.S. history. Beyond the heartbreaking loss of homes, businesses, and natural beauty, this catastrophe has unleashed a financial and insurance crisis that will ripple through every corner of the country.
Insurance expert Karl Susman, host of Insurance Hour, recently broke down how this disaster affects everyone—not just those in burned neighborhoods. His insights reveal an intricate web of consequences that connect wildfire losses to global insurance markets, supply chains, and even your household budget.
At first glance, it's easy to assume that wildfire victims are only those whose homes or vehicles were directly destroyed. But as Susman points out, the impact extends far beyond the fire zones.
Consider the ripple effect: when hundreds of homes and businesses in areas like Pacific Palisades are gone, so are the jobs that supported them. Pool cleaners, landscapers, home cleaners, construction crews, local grocers, and car wash attendants suddenly have no work.
This loss of income triggers a domino effect across California's economy. Fewer paychecks mean reduced spending in other sectors, from restaurants to retail. Even people living hours away may feel the sting as local economies tighten and prices rise.
In short, everyone—from the small business owner in Los Angeles to the homeowner in Fresno—feels the shockwave of these fires.
Susman explains a concept most people have never heard of but that quietly determines their insurance costs: reinsurance.
Reinsurance is essentially "insurance for insurance companies." It helps spread financial risk so that when a massive catastrophe strikes—like California's wildfires or even an international event such as a shipping disaster—no single company is wiped out.
But here's the twist: these reinsurers operate globally. When billions are paid out for California's losses, reinsurance premiums rise worldwide. That means even homeowners in Texas or New York could see their rates increase because of fires hundreds of miles away.
This interconnection highlights a critical truth about modern risk: disasters are global financial events. The destruction in Malibu might soon affect your renewal premium in Miami.
Once the fires stop, the next challenge begins—rebuilding. Construction resources are now in short supply. Skilled labor, lumber, roofing materials, plumbing parts, and even architectural services are suddenly in enormous demand.
Susman notes that after major wildfire events, rebuildi ...
