California's homeowners are facing a storm that's not made of wind or fire—but of policy cancellations, non-renewals, and skyrocketing premiums. As wildfires intensify, insurers are reassessing their exposure, leaving thousands of residents scrambling for coverage. In a recent discussion, insurance expert Karl Susman shed light on why insurers are retreating, how the system really works, and what homeowners can do to protect themselves in this rapidly changing environment.
For decades, Californians trusted familiar insurance names like State Farm or Allstate to safeguard their homes. But in the past few years, these companies have pulled back, non-renewing tens of thousands of homeowners—particularly in fire-prone regions like the Pacific Palisades, Malibu, and parts of Northern California.
In one instance, State Farm non-renewed 1,626 policies in a single ZIP code (90272). For many residents, this was a devastating blow. Some had been loyal customers for 20 or 30 years, only to receive a terse letter: "We will not be renewing your policy."
As Susman explains, "We were upset at the time. But looking back, maybe they knew something we didn't. They were using catastrophe modeling."
The term catastrophe modeling may sound technical, but it's at the heart of today's insurance crisis. Insurers now use advanced data analytics—satellite imagery, drone surveys, and risk simulations—to forecast potential losses from natural disasters. These models don't just assess an individual property; they evaluate the entire region's risk profile.
The results have been sobering. Wildfires once considered "100-year events" are now occurring every three to four years. In insurance math, that's a game-changer. As Susman notes, "When a loss becomes a near certainty, how do you insure that? You can't do the math on an uninsurable event."
These models inform insurers' underwriting decisions. If the probability of loss exceeds acceptable thresholds, companies reduce exposure—meaning they stop writing or renewing policies in that region. That's why once-affordable, widely available coverage has become so scarce in California's hills and canyons.
Susman describes the shift bluntly: "It's no longer shopping for insurance—it's hunting."
Years ago, a broker could call a dozen carriers and find the best fit for a homeowner's needs. Today, options are so limited that agents scramble to secure any policy before it's gone. It's not about comparison—it's about survival.
