The insurance industry is grappling with the escalating risks posed by wildfires, particularly in California. Insurers are pulling out of high-risk areas, leading to turmoil in the home insurance market. San Bernardino County's call for a state of emergency highlights the urgency of the situation. The California FAIR Plan, which is designed to provide insurance for high-risk homes, is under significant strain, with $340 billion in exposure and only $250 million in cash reserves. An $8 billion fire could wipe it out. Insurers like State Farm are using data to price wildfire risk accurately, but banks lack similar sophisticated risk models, potentially leading to widespread foreclosures and financial instability. The FIRE economy is at risk as insurance exits could destabilize the housing market. As wildfires and other natural disasters become more frequent and severe, the need for urgent reform in the insurance and financial sectors becomes increasingly apparent.