California's levy of $1 billion on private insurers to help pay out wildfire claims in its state-created safety net program has renewed focus on the challenges the industry faces in a market already losing appeal rapidly,

California’s plan that provides insurance to homeowners who can’t get private coverage needs $1 billion more to pay out claims related to the Los Angeles wildfires, the state Insurance Department said Tuesday.

California Insurance Commissioner Ricardo Lara has requested $1 billion in additional funds from the commission's member insurers to shore up the state-backed FAIR Plan after wildfires ravaged swathes of land in and around Los Angeles last month.

The funds will help the state’s insurer of last resort pay claims to thousands of homeowners affected by the wildfires.

In the wake of the Los Angeles fires, the California FAIR Plan, the state's property insurer of last resort, requested approval for $1 billion from the California insurance commissioner, which he approved the same day. That money will be assessed from all home insurers operating in the state.

The move will likely lead to higher costs for households across the state, and may push more insurers to leave, intensifying a home insurance crisis.

Bay Area homeowners will likely be on the hook for helping bail out California’s insurer of last resort to the tune of $1 billion after it ran out of money to pay claims from the devastating Los Angeles wildfires.