CALIFORNIA — Governor Newsom this week slammed the status quo on wildfire recovery and the financial middlemen who have made billions from the state's current system.
“Here's my response to those that don't want change: It's untenable. The status quo is not going to work. And it's not going to work for victims who consistently are last in line. That's at the core of this reform. Hedge funds have done very well. They get paid whole. Insurance companies have done very well — they get paid whole. My friends, the trial attorneys — they've gotten paid whole. At the back of the line are the victims of these fires. And that's not right.”
— Governor Gavin Newsom“I want the hedge funds out of this business. … Subrogation issues have to be addressed. Utility accountability has to be addressed. We've got to keep hedge funds out of this extraction business. And victims need to be first in line, not these other groups.”
— Governor Gavin NewsomYou can watch his full remarks here.
Data from the independent California Earthquake Authority report, CPUC filings, and the 2019 PG&E bankruptcy documents underscore this point, showing how electricity customers are paying for a broken wildfire recovery system that rewards financial middlemen ahead of victims. Taken together, payments to these intermediaries have dwarfed the recovery payments victims ultimately receive.
Under the current system, hedge funds and private equity firms can buy up wildfire-related claims at a discount, then pursue full payouts in court — a practice the California Earthquake Authority has described as opportunistic, profit-driven speculation. One firm, Baupost Group, is estimated to have made roughly $1 billion buying claims against PG&E following past wildfires.
Meanwhile, insurers who profit off selling claims to financial middlemen continue to seek double-digit rate hikes even as the industry posts historic earnings. State Farm, for example, has requested rate increases as high as 22% for homeowners and up to 38% for rental properties. At the same time, the property and casualty insurance industry posted its most profitable underwriting year in more than two decades, with underwriting income reaching $68.7 billion in 2025 — up sharply from $25.3 billion the year before.
Attorney contingency fees in California wildfire cases commonly range from one-third to 40% of a victim's total recovery, further reducing the money survivors have available to rebuild.
Wildfire Victims First is a coalition of more than 250 organizations across the state advocating for reforms that protect Californians from wildfires, make insurance available and affordable, and ensure victims are paid first, fast, and fairly:
- Protects people from wildfires
- Makes insurance available and affordable
- Pays victims first, fast, and fairly
To learn more about the Wildfire Victims First coalition, visit WildfireVictimsFirst.com.
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