California Earthquake Authority Proposes $25 Billion Wildfire Insurance Fund

The California Earthquake Authority released a report on April 7, 2026, outlining a systemic overhaul to address the financial impact of wildfires on residents. The agency warns that wildfire risks have created a state of climateflation, where residential utility costs are surging and the insurance market is destabilizing.

Data shows that Pacific Gas & Electric Corp. customers pay an average of $41 per month in wildfire-related surcharges, accounting for 19% of their bills. Southern California Edison and San Diego Gas & Electric customers face increases of 17% and 14% respectively. These costs follow a period between 2019 and 2023 during which the California Public Utilities Commission authorized utilities to recover $27 billion for insurance and prevention.

To mitigate these costs, the authority proposes ending utility liability for inadvertently starting fires and establishing a $25 billion state-chartered insurer of first resort to replace the FAIR Plan. This new entity would assume catastrophic wildfire risk, enabling private insurers to remain in the market. These recommendations fulfill a mandate from legislation signed by Governor Gavin Newsom in September 2025.