Numbers and Conversations in the Fires’ Aftermath

By Mike Koetting        February 11, 2025

The thing about numbers is they are objective. You can fudge them for a while, but eventually their concreteness wins out.

So when the insurance actuaries mull over the Los Angeles wildfires, they will issue verdicts not based on rhetoric or hope or blame, but gimlet-eyed assessments of what makes sense for insurance companies—increase rates, leave or what.

We already have a preview. In the year leading up to the fires, State Farm, the largest homeowners insurance company in California, anticipating the risk, refused to renew thousands of policies there. They had already stopped selling new policies in the state. Other insurers are similarly trimming their sails.

Now, the $200 billion in wildfire losses (another number, not exact but probably order of magnitude correct) puts a new urgency in the discussion.

I am guessing that the actuaries’ conclusions will be rates such that private insurance in the burned-out neighborhoods will be so expensive—if even available—it will be beyond the reach of many.

The resulting options will be various shades of uncomfortable.

The most likely is that the state of California will stretch its state-sponsored insurance program to include more people. Understandable, but problematic. Why should the cost of living in areas that are now environmentally risky be borne by people elsewhere in the state? Moreover, if the past is any indication, it is likely that the insurance offered by the state will be underfunded. In the likely event of another catastrophe, there will have to be another bailout. While I would judge it better to be realistic about the loss potential up front and appropriate accordingly, given the distributional problems, the politicians are likely to shy away from that approach. (Those pesky numbers again.)

An approach organized around the most effective and equitable use of state funds would probably be for the state insurance funds to “red line” these neighborhoods. If people could afford the private market—or were willing to go uninsured—they could rebuild there.

Of course this would create a different firestorm. How could society be so cruel to the people for whom these neighborhoods had been home? Who had lost everything and now want to rebuild, to get back to their old lives?

And this is the pivot point. The numbers are telling us there is no going back as we knew it. The question before us—and not just in California—is whether as a society we can face up to that reality.

I am worried that facing that reality is beyond our current political process. We have lost the ability to have productive conversations on complicated issues that have no simple answer and require difficult trade-offs. We are currently locked in a system where politicians find it easier, indeed almost required, to stick to rigid party identification rather than wrestling with the real dimensions of our problems.

This attitude is exacerbated by our two-party approach. Most elections are now decided in the primary. Even when the larger citizenry has more nuanced desires, which is often the case, the political structure has too many incentives to stick to party orthodoxy in the primary. The only choice left to voters in the general election is their usual party affiliation or the other party. This turns elections into “winner-take-all” choices that do not reflect well what voters want and is leading to gridlock, intellectual and social, as well as political.

We need a new group of politicians, elected by grown-up voters who recognize that there are no easy answers to our biggest problems. The best we can do is have thoughtful, numbers-informed discussions about the various pros and cons, discussions that go beyond the name calling and bumper strip quips. It’s not about “winning” but more focused on muddling toward the least problematic solutions based on our unevenly shared values. We need discussions that recognize uncertainty and the need for hard choices that will disappoint some.

Our current election processes do not help us get there. Ranked choice voting would be a big step in the right direction. But if we can’t modify our politics, the numbers will continue to be bleak. Or downright catastrophic. We can’t vote away the reality behind the numbers.