California

Hedge funds are facing pushback in California as their bets tied to insurance claims stemming from the Los Angeles wildfires are attacked as unethical.

The state's regulator said the insurer must show it will cover more homeowners, and be more transparent. Consumer advocates want more concessions, saying the insurance crisis can't be solved on the backs of homeowners.

Consumer Watchdog says increase was not justified, while insurance commissioner points to concessions gained from the insurer.

The probe into the deadly Southern California Eaton fire is likely to take a year or more as authorities examine Edison International's utility equipment as the possible cause, according to the company's CEO.

Homeowners class action plaintiffs will depend on finding evidence of conspiracy in discovery process, a legal expert said, but the large scope and cost of discovery, as well as difficulty getting a summary judgment, are likely to lead defendant companies to settle.

Consumer Watchdog argues that California's insurance commissioner cannot allow the FAIR Plan homeowners insurance of last resort to pass on half a $1 billion assessment to consumers.

AB 226, a borrowing mechanism bill passed by the state assembly, allows bond issues supporting the homeowners insurer of last resort – but doesn't specify traditional financing or catastrophe bonds. Cat bonds would not have to be paid back. Also, a climate finance policy advisor said, the bill doesn't account for future disaster risks.

Recent wildfire updates include the Federal Housing Authority's waiving of quality-control reviews and the upheaval of the state's commercial real estate space.

State lawmakers approved a trailer bill to last year's budget that aided Medi-Cal and provided funding to local governments affected by January's wildfires.

Insurers resort to subrogation when they suspect that a third party is ultimately responsible for the losses. Rather than deal with the recovery risk, insurers have been selling claims on to alternative investment managers.