LA has big plans to rebuild after the fires. Good luck getting insurance.

Subscribe to enjoy similar stories. In her pop-art decorated office in the heart of Beverly Hills, real-estate broker Rochelle Maize got an early look at who would control the future of the Pacific Palisades. It was eight days after the wildfires broke out—before Los Angeles Mayor Karen Bass had appointed a recovery czar, before rebuilding plans had been drawn.

Fires still burned, and the air was putrid with the ashes of thousands of torched homes. Even then, the power of California’s insurance companies was becoming evident to Maize. Her clients buy and sell mansions in crown-jewel neighborhoods where listings bottom out around the single-digit millions.

Many pay in cash. But after the Palisades fire, deals in the area kept falling through. One client wanted to go ahead with a seven-figure purchase, risk be damned, even if he had to be self-insured—meaning he would proceed without a policy.

It’s in a great area, Maize recalled the client saying. I’m just willing to take the risk. She thought that was crazy.

The question for Los Angeles isn’t so much how to rebuild the Palisades, a coastal community that is home to some 21,000 people, but who pays if it burns again. “Writing new policies doesn’t make any sense at this time," State Farm General, California’s largest property insurer, wrote Tuesday to the state insurance commissioner. To shore up its finances, the company is seeking permission for a 22% rate increase for 1.2 million homeowners.

The state’s fire-recovery dilemma was aired at a recent meeting on the third floor of an office building in Oakland, Calif. Insurance commissioner Ricardo Lara convened executives from State Farm and Consumer Watchdog, a nonprofit advocacy group. By then, the scale of damage from