Governing Wildfire Insurance Under Mortgage Constraints: An Availability-Affordability-Capacity Framework with Decision-Oriented Evaluation for California, 2018-2024 (Research Square)

Summary

• FAIR Plan calibration MAE is 0.066 percentage points for 2018-2021 and temporal-holdout MAE is 0.121 points for 2022-2023.p.3
• California FAIR Plan share of residential policies rose from 1.617% in 2018 to 3.749% in 2023, with an estimated 2024 share of 5.15-5.36%.p.18
• The revised 2023 allocation is 69.87% voluntary coverage, 3.61% residual coverage and 26.51% model-implied force-placement exposure.p.25
• Florida Citizens policies fell from 1,263,055 to 936,182 between 30 September and 31 December, a decrease of 326,873 policies (25.9%).p.26
• Texas TWIA reported 252,433 policies in force and approximately $99.3 billion of exposure at 31 March 2024.p.28

Key insights

1. Across nine open-bin mappings, 2023 failure ranges from 25.29% to 28.02%, so the result does not depend on a single assumed value.p.24
2. The revised failure is 25.26% in 2022 and 27.16% in 2024, so the original sharp collapse is attenuated but not eliminated.p.24
3. Model-implied force-placement exposure is not an observed servicer action or uninsured rate.p.25
4. The 6% residual capacity bound is a scenario assumption and not an estimate of California FAIR Plan statutory capacity.p.28
5. Residual resilience moves aggregate modelled coverage only from 57.1% to 57.2%.p.28
6. Predictive MAE is minimized at λ=2.2, whereas the equal-weight decision score selects λ=1.6.p.29
7. Under all nine open-bin combinations, 2023 force-placement exposure is 25.29-28.02%, compared with 42.9% under the original specification.p.30