The insurance market for luxury homes in wildfire-prone regions like California is undergoing a dramatic realignment. With major carriers retreating from high-risk areas, a patchwork of lesser-known and often loosely regulated insurers is stepping in. The result, according to industry experts, is not so much a scarcity of coverage as a deepening complexity – leaving wealthy homeowners with difficult choices and growing exposure.
“High net worth clients and their advisors need to become more educated buyers,” said Robert Courtemanche (pictured). “The challenge isn’t availability – it’s understanding what coverage really means, and which carriers you can count on when a claim hits.”
Historically, the industry has drawn a sharp line between admitted and non-admitted carriers, the former seen as safer due to state oversight and backing by guaranty funds. But Courtemanche argues this distinction has become less relevant for high-value properties. “Coverage availability isn't strictly about being admitted or non-admitted,” he said. “One isn't necessarily better in terms of financial strength or service model.”
What matters more is the insurer’s financial stability and claims capability. Admitted carriers may offer regulatory protection, but the guaranty fund payouts often fall far below the value of multimillion-dollar homes. Ratings from agencies like AM Best or Fitch, Courtemanche said, are more useful indicators of reliability.
In California, the largest homeowners’ market in the US, major carriers have pulled back sharply. “State Farm, the largest carrier, used to write $15-$20 million homes comfortably. Now, they're struggling with admitted pricing,” Courtemanche said.
In their absence, non-admitted players are stepping in – but with varying quality. Some are supported by established underwriters and infrastructure. Others are less stable and offer limited claims support. “The market in California will be a free-for-all,” Courtemanche said, urging clients to scrutinize brokers and carriers carefully.
The risk landscape is also reshaping homeowner behavior. Where once affluent clients sought generous limits and low deductibles, many now accept more exposure, if they understand the trade-offs. “Clients are now being encouraged to treat their homes like financial assets and assess risk accordingly,” Courtemanche said.
That shift includes using analytics. “Many clients have strong quantitative skills and appreciate this kind of data,” he said.
Still, modeling only goes so far. Without public policy reform, particularly in forest and fire management, private solutions may continue to fall short. State-run programs like California’s FAIR Plan or the National Flood Insurance Program, Courtemanche said, are not designed to meet the expectations of high-net-worth clients during catastrophic events.
Some jurisdictions offer potential models. Florida’s strict building codes have helped newer homes withstand hurricanes. Similarly, homes built to enhanced fire standards in California have seen better outcomes in recent wildfires. “The challenge is retrofitting older homes,” Courtemanche said – a costly and often deferred investment.
Meanwhile, some insurers are exploring hybrid approaches by launching non-admitted subsidiaries to continue serving volatile markets under more flexible pricing structures. These models allow limited continuity but do not resolve the broader pressures affecting the market.
“Collaboration between regulators and carriers is essential to promote risk mitigation and enhance long-term resilience,” Courtemanche said. For now, however, those partnerships remain limited. And for homeowners in wildfire zones, the need for clear, reliable coverage is becoming more urgent.
