Prefatory Questions
- Why did California insurance commissioners levy no assessments on carriers since 1995 to cover firestorm property losses resulting in a financially broke FAIR Plan by the 2025 Palisades Fire? Was this insurance crisis planned and allowed to simmer until the Palisades Fire and Trump’s second presidency?
- Why was an influx of homeless allowed in late 2024 in Palisades High Fire Zones?
- Why did Gov. Newsome block a California National Gud Firefighters Fast Response Team until 10 days after the fires broke out?
- Why did Gov. Newsome call a special session of the legislature purportedly to “Trump proof” the state’s global warming programs from federal DOGE (Dept. of Government Efficiency) cutbacks that would entail California suing the federal government while perplexingly asking Trump for $2.5 billion in FEMA funds in part to fund those lawsuits?
- Why did David Jones, California’s past insurance commissioner for two prior terms, and now pro-global warming director of UC Berkeley’s Center for Law, Energy and the Environment, refuse to impose assessments on insurers, and now in double-dealing fashion say: “insurers can’t increase their way out of the insurance crisis” that he created?
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Interviewer Question: “(Is the California property insurance crisis) going to get worse before it gets better?
Answer: (Worse). Especially if you’re anywhere near trees (a forest). Everybody thinks of the wildfire area as the place where they see trees everywhere around mountains. But the concern is not the wildlife areas that don’t have a lot of properties in them. That is not a real concern in the great scheme of things. It is not that bad. The real risk area is the WUI (‘woo-eee’). That stands for Wilderness Urban Interface where the forest ends and then there is this collar around it where you’re abutting up against. It’s the transition zone where the wildfire starts out, where wildfire embers blow into the “Woo-eee.” That’s what Pacific Palisades is – a Woo-eee. It’s a transition zone to wildfire. So, a fire starts out in the forested area and the embers blow into the Woo-eee, and you get this house-to-house spread. So, if your property is in the Woo-eee you can sort of look at the greenspace on a map and imagine being within a mile and a half of a densely forested area; that’s the Woo-eee– those properties are going to have a very difficult time getting coverage”.
— Darren Nix, CEO, Steadily Insurance Company
If you made a bad satirical joke that California’s plan to bail out its underfunded high risk fire insurance plan by starting more fires to enlarge its existing 330,000 pool of high fire risk policy holders to spread the burden, it might be difficult to separate the joke from reality. This is because no one would laugh and upon second thought might believe it is credible.
Nonetheless, compound negligent government policies and decisions over decades have resulted in homes in Wilderness-Urban Interface WUI zones (defined above) becoming rows of tinderboxes when wildfire ignites. The tendency of such ember-driven fires to hop from house to house in a precise pattern evokes suspicions that some microwave beam is surgically striking fires. But there is no need for such high tech as wildfires are pulled like magnets to fuel sources such as stick built homes with shingle roofs, and “firenados” rush in to fill low air pressure areas. The one thing in common with the Palisades, Eaton Canyon and Lahaina fires is high density substandard wood framed structures that are not hardened against combustibility with almost no defensible space between structures and the raging fire. Albeit even concrete homes can be destroyed by 1,000-degree F heat generated in a fire vortex. But firefighters can stand near the vortex without being harmed.
To compound the riskiness of insuring a home in a WUI, a fire protection engineer inspected burned out structures at the Palisades and found them all to be stick-built houses that were non-code compliant with respect to vegetation abutting structures and combustible wood decks and fences. Vented attics that airborne fire embers can penetrate are also a contributory factor to loss by a convection fire. Most burned out homes should not have been able to buy fire insurance due to their massive non-compliance with building and fire codes. Conversely, structures that withstood the fire had concrete construction and had clear cut buffer areas around the house and no combustibles. Will insurance companies deny coverage to those homes which fail a post-fire audit of code compliance?
California’s public/private FAIR (Fair Access to Insurance Requirements) Plan had a total $449 billion net fire insurance liability exposure as of September 30, 2024. This does not even include the $35 to $45 billions of estimated property losses incurred by the infamous Pacific Palisades and the Eaton Canyon Fires that ignited on January 7, 2025.
The FAIR Plan and Newsome’s Re-Build Plan
What is the FAIR Plan? Thirty-five other states also have a FAIR Plan. It is not a taxpayer funded state agency. It is a mandated organization regulated by statute, with involuntary participants, of around 100 private property casualty insurers. It is regulated by an elected state insurance commissioner. Some of the major carriers have left California due to the high risk of insuring Wilderness-Urban Interface zone homes and its FAIR Plan being only 2 percent funded. FAIR writes policies for risks the private insurers will not write. So, if where you live is in an Urban Wilderness Urban Interface zone you cannot get private insurance, and the only option is California’s FAIR Plan. The FAIR Plan, however, also has the government power of assessment. So, all 100 +/- property insurers in California are subject to an involuntary assessment to fund FAIR’s $449 billions of wildfire liability exposure. Insurers must, in turn, commensurately raise insurance premiums for all property policy owners to cover that exposure.
If exposure is spread only over California’s 330,000 Fair Plan policy holders this reflects a staggering $136,061 lump sum hypothetical higher added premium per policy holder. But if spread over California’s estimated 8,909,419 single-and-multifamily housing owners this would reflect about $5,040/year per residential property owner if financed by a tax-exempt municipal bond. FAIR policy holders represent only 3.7 percent of all state property owners. Moreover, according to the Lending Tree, some 806,600 homes in California are uninsured for fire loss, with 1 in 10 homes in the Los Angeles area uninsured. Presumably, FAIR would have no power to assess uninsured property owners. Adjusting for the uninsured, this would reflect $5,541 per year.
Gov. Newsome’s catastrophic fire loss Re-Build Policy calls for rolling FAIR’s liabilities into a tax-exempt municipal bond issued by the California Infrastructure and Economic Development Bank, which typically funds fire stations, public schools, roads, parks and water and sewer systems in new master-planned residential developments with tax exempt municipal bonds. High risk municipal bonds in California reflect about a 4.5% to 5% interest rate compared to 10% or higher for a high-risk corporate bond. Taking the $5,541/year of added insurance premium spread over 8,048,619 policy holders, this would equate to $462 per month added insurance burden. Conversely, if this risk exposure can only be spread over FAIR’s existing policy holders, this would reflect an additional roughly estimated insurance payment of $898 per month or $10,775 per year, which would be unacceptable to the public. So, the only politically acceptable and economic option is to socialize the $449 billion in uncovered fire risk exposure over all policy holders in the state.
The Origin of Palisades Firestorms Goes Back to its Land Subdivision
Which brings us to the origin of the Pacific Palisades. The Palisades land was purchased by the Methodist-Episcopal Church in the 1920’s. It was divided up into highly dense small lots with no requirement for paying for public works or infrastructure, fire suppression infrastructure, or environmental impacts as would be today. There was no residential lot subdivision law as there is today. The first Palisades lot buyers were church members who had an exclusive chance to snap up lots as ocean view homes anywhere else would be unaffordable. Custom homes were built out piecemeal by custom home buyers. The Pacific Palisades has never been annexed into the city but apparently contracts with LA for public services.
The small lots precluded enough lot size for a water tank for fire suppression. The municipal water lines were not designed for holding water pressure for fire hydrants if everyone tried to wet their roofs at the same time. According to an anonymous civil engineer I contacted, residential land subdivisions are not so designed even today as costs would be prohibitive.
Some homeowners have already filed lawsuits against the city over the empty Santa Ynez reservoir issue, but it is a regulating reservoir not a storage reservoir. It was shut down to meet water quality standards since birds deposited waste in the uncovered reservoir. Potable water is supplied to Los Angeles from Castaic Lake which delivers water to the Jensen Filtration Plant in Sylmar and, in turn, sells treated water to the LA Department of Water and Power for conveyance throughout its water system, including the Palisades. Castaic Lake is 98% full as of January 2025.
Fire risks and reliability of water pressure in a firestorm are issues typically dealt with by real estate disclosure laws where buyer due diligence and seller disclosure is required. The Pacific Palisades lots and homes are legal but non-conforming improvements that do not meet current building and land division codes but are grandfathered under the law. Moreover, no property in a WUI can be sold without the seller giving the buyer the wildfire disclosure report.
Newsome’s Re-Build Plan is a Wealth Transfer to the Rich
Put differently, Newsome’s Re-Build Plan would entail 96 percent of all state property policy holders picking up the extra tab for about 4 percent of policy holders who have suffered fire losses in Wilderness Urban Interface areas. Looking at a map of where the FAIR Plan policy holders are located indicates Southern California fire insurance liabilities are clustered in forest tourist areas (Big Bear City, Big Bear Lake, Lake Arrowhead) and mountain luxury home areas (Palisades, Crestline). Northern California FAIR Plan policy holders are in hilly urban forest areas (Berkeley, Orinda) and mountain forested areas (Grass Valley, Nevada City, Truckee).
But several major insurers have already left writing new policies in California as the state did not keep fire loss assessments fully funded. This may have initially been due to political pressure put on government by wealthy homeowners who learn as an investor class to socialize losses but capture private gain wherever possible (see Donald Hagman’s book Windfalls for Wipeouts: Land Value Capture and Compensation, 1974). Palisades residents whose homes were destroyed reaped real estate unearned value windfalls for decades by escaping land planning and building code requirements, only to be now wiped out for the very same reason. And it appears the Palisades landowners will be bailed out again by Gov Newsome’s Re-Building Plan at the expense of everyone else. Was the collectivist Karl Marx, however, at least right on one thing: his contention that history is controlled by hidden material interests of elites working against the people?
Such unearned windfalls should be no surprise given 1930’s Los Angeles was the Hollywood movie backdrop of the historical corruption of capturing water from Owens Lake in the Sierra-Nevada Mountains, the loss of lives due to failure of St. Francis Dam designed by untrained William Mulholland, and land speculating by elites based on inside knowledge of Owens Lake water being distributed in residential subdivisions in formerly dry San Fernando Valley. This story was made famous by the movie “Chinatown”. But there is a catch to any such prospect of a double dipping windfall.
Real estate broker Josh Altman asserts 70% of the Palisades homes will not be re-built due to insufficient insurance, unaffordability of rebuilding given $1,000 per square foot construction costs but set caps for re-building payouts by insurers, elites gaming the system by not carrying fire insurance, and the inability to find a contractor when 16,000 homes all need to be built concurrently. And any unbuilt lots will eventually have to be sold at a literal “fire sale” price (say 50% discount of fully developed value) to induce a buyer to take all the development risks with full knowledge that any new home may likely be vulnerable to another firestorm every ten years or sooner. Small lots in the Palisades sell for between $500,000 to $1 million. However, if a competitive market arises for the lots, the eventual sale price may climb higher than 50% of fully developed lot value. There may be no way for a property owner to recoup all market loss unless their home is re-built to current code requirements in concert with their neighbors.
Destructive Convection Fires are Facilitated by Elites, Not Solely Acts of Nature
In conclusion, an understanding of how such bewildering wildfires have plausibly been “facilitated” by powerful elites and not set by arsonists or from microwave beams from a satellite, nor pure acts of nature or merely homeowner negligence, needs to be explained.
Unstoppable high pressure wind vortexes can fan firestorms and “firenados” indirectly facilitated by powerful elites without any need for conspiracy theories about arson or combustion by directed energy weapons from satellites (which is technically infeasible). The stage can be set for such a seemingly spontaneous occurrences especially in older, non-code-conforming stick-built housing tracts adjacent to forests called WUI zones (see above). Such events occur where airborne embers from a homeless encampments relocated into the area by politicians, ignites a brush fire, such as the Pacific Palisades. Once ignited, such facilitated fires rapidly hop from home to home at 1000-degrees F overpowering the capability of homeowners wetting rooftops to save their homes. And once everyone uses a garden hose to wet the roof, water line pressure drops making it good for nothing (unless they deploy a gasoline powered swimming pool pump, are capable of using it, and can climb up on a sloping roof in a wind storm).
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The fires can then be touted as proof of global warming by intellectual elites whose material interests are dependent on the environmentalist political economy and against the people. The trick by is to make what is created by elites seem as an act of god or nature or industrial climate change. The invisible facilitation of spectacles is devilishly described by Niccolo Machiavelli in his book The Prince, which explains how violence is carried out against the people who intuitively realize may be created by elites for social control but can’t put their finger on how it is magically pulled off (see Yves Winter, Machiavelli and the Orders of Violence, 2018.
Similarly, elites have known for centuries how to cook up epidemics. This same facilitation process was historically deployed to genocide American Indians who were forcefully displaced from their habitats near water resources of rivers and lakes, relocated to arid desert areas, and had their main source of protein food from bison wiped out. American Indians were stressed by use of force which resulted in what has been euphemistically called epidemics, although measles, smallpox, malaria and bubonic plague are caused by malnutrition and social stress from genocidal subjugation or from assignment into a caste, not from “germs”. The same facilitation process was used for the bugaboo COVID (see chapters 8 “Is Establishment Medicine an Injurious Scam?” in Denis Rancourt, Hierarchy and Free Expression, 2013). The Mises Institute has written about wildfires in relation to government failures and the need for market forces to weigh risk.
(Disclosure: I worked 20 years for California’s largest wholesale urban water district and have separately and independently valued many billion-dollar new land subdivisions for issuance of tax-exempt bond financing for new homeowners to pay their Community Facility District assessments for fire stations, schools, water and sewer systems, etc.).
