California’s home insurance market is facing growing instability as climate-driven wildfire increase insured losses, elevate future risk, and contribute to rising premiums, insurer non-renewals, and expanding reliance on the California FAIR Plan. In response, the proposed California Affordable Insurance and Recovery Act establishes a statutory framework allowing the Attorney General to recover climate-attributable insurance losses from large fossil fuel corporations and allocate recovered funds toward compensation, FAIR Plan stabilization, and wildfire resilience.

This report evaluates the potential consumer and economic impacts of the Act using a scenario-based modeling approach that examines two litigation pathways: an event-based recovery following major wildfire disaster, and a broader system-wide recovery addressing cumulative insurance premium impacts. The analysis models various compensation distributions, finding that recovered revenues could produce substantial household benefits, job creation, and economic growth while dispersing assessed costs broadly across global markets.