A ‘silent threat': California officials announce hearing into wildfire victim underinsurance following Chronicle investigation

San Francisco Chronicle​

12-05-2025

California officials plan to hold a hearing later this month to discuss solutions to widespread underinsurance among wildfire survivors, following a Chronicle investigation that exposed the severity of the issue and tied it to insurance companies' use of flawed algorithms to write homeowner policies.
In an April 29 meeting of the California State Board of Equalization, the agency tasked with overseeing property taxes on homeowners, Vice Chair Sally Lieber suggested the hourlong informational hearing in light of the Chronicle's 'very substantial and needed journalism around algorithmically driven underinsurance of properties across California, especially in wildfire-prone areas.' In a letter to the board, Lieber said the hearing would focus on the impact such algorithms have on disaster recovery and to discuss possible legislation.
'I consider this the silent threat to homeowners across California,' Lieber told the Chronicle in an interview.
Underinsurance is the phenomenon where a homeowner's insurance policy limits are too low to cover the cost of rebuilding their home. It has emerged as yet another challenge facing survivors of the Eaton and Palisades fires in Los Angeles, which destroyed whole neighborhoods earlier this year. While it's still unclear precisely how many of these survivors lack adequate insurance to rebuild, studies of previous blazes in California and Colorado have found consistently that between two-thirds to three-quarters of wildfire survivors were underinsured.
A major driver of the problem is insurance companies' reliance on a fundamentally broken system to predict rebuilding costs, the Chronicle's investigation found. Central to the system is a software program called 360Value that agents use to recommend insurance policy limits for homeowners; the tool, which is sold by insurance conglomerate Verisk, is used by companies covering at least 40% of the California homeowner's insurance market, including State Farm, Farmers, CSAA and USAA.
Yet 360Value often makes incorrect assumptions about the homes it analyzes, and its underlying pricing data does not adequately capture the high cost of rebuilding in the state, the Chronicle found.
Insurance companies have repeatedly learned of these tools' shortcomings for years, through lawsuits and government investigations, and yet have largely failed to fix them. Internal records from a lawsuit filed by Farmers Insurance Group show that the insurer identified near-ubiquitous underinsurance among a group of policyholders who had lost their homes, but stopped its internal investigation after its legal team raised concerns the company's findings could be used against it in court proceedings.
Consumer advocates and wildfire victims told the Chronicle that underinsurance was a major factor in why wildfire victims rarely rebuild their homes. Just 2,800 of the 11,000 homes that burned in the 2018 Camp Fire have been rebuilt. In Santa Cruz County, only 144 homes of the 700 destroyed by the 2020 CZU Lightning Complex fires have been replaced.
'These issues reflect directly on the Board's authority to administer the state's Property Tax system, particularly if policies and practices of private companies impact negatively the ability of property taxpayers to rebuild their properties and restore the housing stock in areas impacted by wildfires and by other predictable natural disasters,' Lieber wrote to the board.
In addition to overseeing property taxes, the California State Board of Equalization also regulates taxes for certain categories of businesses, including the insurance industry. Its five-member board consists of elected officials across the state, who meet monthly to discuss administrative matters as well as issues that fall under its authority to address via legislative proposals or regulations.
'It's really clear that the victims of the most recent fires in January will be subjected to a lot of market forces. The loss of workers that are not fully documented and the rise in costs of lumber, much of which comes from Canada, will be impacted,' said Lieber. 'It's really essential, from a transparency viewpoint, to make sure that homeowners and owners of businesses in California have an idea of how deeply they may be underinsured.'
Ted Gaines, the board's lone Republican, added that he wanted to learn more about how 360Value and other replacement cost algorithms worked, and whether they were adequately accounting for the surge in building costs that typically follows large-scale disasters — a phenomenon known as 'demand surge.'
'Is there a better approach to wildfires, where you're losing hundreds of homes?' he said. 'What if you had contractors, developers, that could come in and say, 'Hey, we can provide some degree of customization, but we can also build in volume? ''
The meeting, which will be held May 28, is open to the public and will take place in Sacramento at the May Lee State Office Complex Auditorium. Remote attendees can also watch the meeting via livestream or dial in via the phone number on the board's website.
Lieber said she hopes the informational hearing will surface the issues and initiate conversations among lawmakers. She encouraged readers to call or write in with their stories and concerns.