WSJ What’s News - The Economic Toll of the Los Angeles Fires

Episode Date: January 9, 2025

P.M. Edition for Jan. 9. As wildfires continue to rage around Los Angeles, experts are starting to get a sense of their staggering toll. WSJ reporter Jean Eaglesham talks about how homeowners insurance could change in a state ravaged by fire. And five presidents were among the leaders honoring former President Jimmy Carter at his funeral today. WSJ reporter and editor Aaron Zitner reflects on differences between Carter’s political moment and today. Plus, after a recent terrorism attack, tourist-dependent New Orleans is working to make visitors feel safe. WSJ travel reporter Allison Pohle says it’s following Las Vegas’s lead. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Three, two, one. What will the world look like 10 or 20 years from now? The Wall Street Journal's Future of Everything podcast is here to give you a peek. And we can't wait to show you what's coming. Subscribe now. The Los Angeles wildfires could be the costliest in U.S. history, what that means for homeowners and the state's insurance market. The crucial thing now is whether efforts to stabilize the market are going to succeed or whether, unfortunately, the losses from this are going to derail those attempts.

And five U.S. presidents gather in Washington to honor Jimmy Carter. Plus, in the wake of its New Year's Day attack, New Orleans is taking a page from Las Vegas' playbook to bring back tourists. It's Thursday, January 9th. I'm Alex Oseloff for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories

that move the world today. The fires in and around Los Angeles continue to wreak havoc. They've already killed at least five people and have destroyed or damaged thousands of buildings. And experts are just starting to get a handle on the fire's economic toll. Some analysts are predicting that they could be the costliest in U.S. history, with total losses pegged at close to $50 billion.

$20 billion of that, or more, is estimated to be insured losses, which could make this disaster a very expensive one for insurance companies, some of which have already pulled back from California. I'm joined now by Jean Eaglesham, who covers insurance for the Wall Street Journal. Jean, what makes these fires potentially so costly? We're seeing such high costs, partly because these fires are burning some of the most expensive real estate in the country. Also because the fires are spreading so fast. So these estimates doubled almost overnight.

They could still rise further, the analysts are saying. Private insurers can decide simply not to cover some properties if they want to. What options do California residents have beyond that? Yes, certainly in California, the market is under a lot of strain and particularly we've seen in some of these fire prone, disaster prone areas, including unfortunately the Pacific Palisades, we've seen certain insurers not renew policies, so pull back completely because they feel the risks are just too high. That makes it extremely tough for policyholders. A lot of them, increasing numbers, are being forced to use the state's plan, which is called the Fair Plan. Now that's an

insurer of last resort. It's designed to offer fire coverage to people who can't get it elsewhere. That means it tends to be very expensive, the coverage is not that comprehensive. And often you have to buy an additional policy to supplement it. My understanding is that the frequency of these fires is not necessarily anticipated to decline in the near future. What could that mean for Fair Plan? The insurers are saying that because of climate change, the frequency and severity of fires is increasing. Wildfire season is

also increasing. All of this combined with the pressures on the market from private insurers being reluctant to take on high risks means that we're seeing more and more people going to the fair plan. Now they're trying to figure out a way to address that, to stabilize the market, but they haven't got there yet. Are there any efforts being made to get insurers back into the state? There's a huge ongoing push by regulators to try to persuade these insurers to fully come back to the state. What we've seen is big rate increases being approved. In the past, typically, you'd never see an increase over around 7%.

That's all changed now. We're seeing increases of 20%, 30% or more going through. That's unheard of. Also, we see the regulators have passed a series of rules that came to effect very recently that will essentially allow insurers in future to charge higher premiums. And what might all this mean for consumers

who are looking to rebuild? Really for homeowners as a whole in the state going forward, the crucial thing now is whether efforts to stabilize the market are going to succeed or whether unfortunately the losses from this are going to derail those attempts. And then we're really into uncharted territory. That was Wall Street Journal reporter Jean Eaglesham. Thanks, Jean. My pleasure.

Today, Washington took a pause from its preparations for a new president to honor a previous one, Jimmy Carter, the 39th US president and former governor, naval officer, and humanitarian who died last month at the age of 100. A 21-gun salute honored Carter as his casket departed from the Capitol en route to the Washington National Cathedral. Carter's funeral, attended by the nation's five living presidents, comes as Washington is preparing for Donald Trump's inauguration later this month. As Wall Street Journal reporter and editor Aaron Zittner notes, the two men both came into office as political outsiders at a time

of disillusionment with government, but he says the political moment in which they operated could not have been more different. Jimmy Carter lived at a time when there were still giants in the Senate and men who exercised power and reserved power for themselves. They were very jealous of the prerogatives of Congress and the Senate. And this is a moment where Donald Trump has dominating control of his political party and a much weaker Congress,

partly because Congress is so closely divided in the number of Democrats and Republicans, but also just the fact Trump has a crude power relative to Congress and has such a commanding control of his party. You would never see Jimmy Carter do what is done today, which is if a member of Congress steps out of line from your own party, you threaten to run a primary against them. That's a rougher kind of politics than before. US stock markets were closed today to Mark Carter's memorial. Coming up, after a New Year's Day attack, how New Orleans is making tourists feel safe again.

That and more after the break. What then will the future reveal? There's one thing we know about the future. It's being built now. We all have a stake about the future. It's being built now. We all have a stake in the future. The future. The future. The future.

And the Wall Street Journal's Future of Everything podcast is here to give you a glimpse of what's on the way. I'm Danny Lewis. Join us as we dig into how science and technology are shaping the future. For that is where you and I are going to spend the rest of our lives. Subscribe wherever you get your podcasts. Venezuelan opposition leader Maria Carina Machado has been detained by President Nicolas Maduro's regime. After spending months in hiding, Machado made a surprise appearance at an anti-Maduro protest in Caracas today, after which two people close to Machado said, government security agents took her away.

Despite evidence that Maduro lost an election in July, Maduro's inauguration is planned for Friday and his regime has ramped up repression ahead of the ceremony. In business news, we exclusively report that UBS will pay at least hundreds of millions of dollars to settle violations by Credit Suisse of an earlier agreement with the U.S. Justice Department over American clients who evaded tax. That's according to people familiar with the matter, one of which said the settlement could come as soon as this week. Before it was bought by UBS in 2023, Credit Suisse had pleaded guilty to conspiring to

help thousands of Americans cheat on their taxes. The United Nations says it expects global economic output to rise by 2.8% this year, up from its previous forecast of 2.7%. The upgrade reflects higher expectations for growth in the US and China, as well as a boost to investment from central banks lowering interest rates. But the UN warned that growth could be weaker if rising trade barriers like tariffs stall the decline in inflation and cause central banks to hold back on rate cuts.

And Airbus says it delivered 766 planes last year, below the 770 planes it expected. The slight miss reflects the persistent supply chain hurdles that have held back production. For New Orleans, the new year started with a tragedy when 14 people lost their lives in a terrorist attack on January 1st. After horrific events like that, cities that rely on tourism don't want visitors to just be safe but feel feel safe too. Our travel reporter, Alison Poley, says New Orleans is now taking a page from the Las Vegas Playbook, updating its messaging and adding security measures like cameras and uniformed personnel.

After the Route 91 Harvest Festival mass shooting, which was the deadliest in US history, Vegas immediately changed its messaging. It was no longer about what happens here stays here. It was very somber and focused on unity Vegas also increased its security presence to make people feel safer when they were traveling New Orleans is taking a look at this playbook So there's an increased security presence and they're inviting people to be part of their recovery by spending their money in New Orleans. Encouraging people to keep their trips not to

cancel them. There are sure some big events coming up with the Super Bowl next month and with Mardi Gras. So this is a peak tourism time for New Orleans. So they're hoping that there will be no effect on tourism. It remains to be seen but right now the tourism officials say no big meetings or conventions have been cancelled. And that's What's News for this Thursday afternoon. Today's show was produced by Anthony Bansi and Pierre Bienamé, with supervising producer Emily Martosi and deputy editor Chris Sinsley. I'm Alex Osala for The Wall Street Journal. We'll be back with a new show tomorrow morning.

Thanks for listening.