Allstate Corp. reported an estimated $1.17 billion in pretax catastrophe losses for the first two months of 2025, with the majority stemming from the January wildfires that swept through Los Angeles, according to an AM Best report.
The wildfires, fueled by strong Santa Ana winds and prolonged dry conditions, led to widespread destruction across multiple neighborhoods, damaging thousands of homes and businesses. Officials described the event as one of the most severe in recent years, prompting mass evacuations, a federal disaster declaration, and a coordinated response from state and local agencies.
The California FAIR Plan, the state’s insurer of last resort, faced a surge in claims, triggering a $1 billion special assessment on participating insurers, including Allstate. The FAIR Plan, designed to provide basic fire coverage to homeowners unable to secure insurance in the private market, has come under increasing strain as wildfire risks continue to escalate.
Allstate estimated $92 million in pretax catastrophe losses for February, a month that saw fewer large-scale weather events but continued claims processing related to the January wildfires. The insurer had previously projected wildfire-related losses at $1.07 billion, including its expected share of the FAIR Plan assessment and $1.4 billion in anticipated reinsurance recoveries.
The number of Allstate Protection policies in force declined 0.3% year-over-year in February to 37.5 million. While homeowners policies rose 2.5% to 7.5 million, this increase did not offset declines in automobile and commercial lines policies.
Allstate has been adjusting its underwriting strategies in response to rising catastrophe losses and regulatory challenges.
The company has implemented rate increases, stricter underwriting guidelines, and policy non-renewals in high-risk areas. These moves are part of a broader industry trend, as insurers reassess their exposure in wildfire-prone states like California.
The company’s adjustments reflect ongoing efforts by insurers to balance risk management with market availability. California regulators have been working on measures to stabilize the insurance market, including potential reforms to the FAIR Plan and incentives for insurers to continue offering coverage in high-risk zones.
