California Earthquake Authority

Um, and so, uh, if there's a major fire, and let's take the Eaton fire, uh, for the Eaton fire, the first billion dollar in damages, as we've said, that likely associated with their infrastructure, um, first billion dollar in damages is coming from, you know, our, our customer-funded self-insurance.

Beyond that, we will be drawing funds from the wildfire fund that's administered by the California Earthquake Authority.

When we're complete, uh, uh, when we have completed going through the litigation process, uh, by the way, we should talk about a wildfire claims program that we've also set up independently to allow and support, um, our customers who were impacted, being able to get recoveries much more quickly than through standard litigation.

You know, time is of the essence here, so this is one way that we've taken accountability.

Certainly, yeah.

Recognizing that, the legislature then said, "Look, we know we need to do more, and we know we need larger structural reforms.

Let's task the California Earthquake Authority to go do a comprehensive analysis of what else the state needs to do about wildfire mitigation writ large, not just about utilities." So the CEA did that and produced a report in April of 2026.

It was really well done.

So first question, like, can you get it? Yes, it has to be made available for these things.

Like, California Earthquake Authority is, as an example, like, the, the carriers are mandatory.

They have to offer you earthquake coverage every two years.

Flood's not the same.

And again, the state had to step in.

And now we have the California Earthquake Authority.

And those two big events really rocked not only those two states, but the global reinsurance market, because both the insurers and those states were ceding their risk to reinsurers.

And those losses were much bigger than was expected.

And so the legislature in 2025, after the LA wildfires passed Senate Bill 254, which required the investor-owned utilities to contribute another $18 billion over time to the fund, to make sure that there would be sufficient funds to cover claims that were anticipated to come out of the Altadena fire against Southern California Edison for its equipment having ignited that fire.

As well, the legislature directed the California Earthquake Authority to prepare a report with recommendations as to what the state ought to do going forward with regard to how this system works.

And one recommendation was that California ought to change the strict liability regime that applies to utilities that ignite wildfires.

The problem with that recommendation, as the report acknowledged, is that strict liability is a result of a California Supreme Court decision.

The state has taken some good steps over the years.

The California Earthquake Authority was tasked with the job of looking at what else the state needs to do.

It determined that more work needs to be done across the economy, not just utilities, in reducing fire risk, shoring up the insurance market.

And we do need legislators to continue the process of setting up a new framework.

And what we've seen historically is that when the risk becomes too high, they exit the market.

So they exit The earthquake market, so California started CEA, the California Earthquake Insurance.

They largely exited the flood market already, so the government had to set up a national flood insurance program.

Wildfire is headed down the same trajectory, so let's get ahead of the curve.