Navigating Seasonal Spikes in Insurance: Lessons From the 2025 LA Wildfires

By Peter Crowe and Nick Lamparelli

January 2026

Executive Summary

Referencing the dual challenges that California’s insurer of last resort faced in the wake of last year’s January wildfires, Peter Crowe and Nick Lamparelli revisit the idea of elastic staffing. They argue that insurers should adopt elastic models to maintain resilience, protect customer experience and avoid employee burnout during periods of extreme volatility.

What remains far less predictable is how severe those surges will be and how many operational fronts they will hit at once.

The anniversary of the 2025 Los Angeles wildfires highlights a particularly pressing issue: how insurers manage sudden, simultaneous spikes in claims and new business. This challenge is not unique to California but underscores a broader vulnerability within the insurance sector, one that demands innovative solutions to ensure operational resilience.

The 2025 LA Wildfires: A Dual-Spike Stress Test

The 2025 LA wildfires were a stark reminder of the destructive force of nature and the financial toll it exacts on individuals, communities and insurance organizations. For California-based insurers, the aftermath was particularly challenging. The California FAIR Plan, the state’s insurer of last resort, faced an unprecedented scenario: a simultaneous surge in claims from policyholders impacted by the fires and a dramatic increase in new business from homeowners seeking coverage after private carriers exited high-risk markets.

This dual spike in activity is virtually unprecedented in the insurance sector. Most insurers are structured to handle fluctuations in either claims or new business, but not both simultaneously. The FAIR Plan’s experience highlights a critical operational weakness across the industry: the inability to scale staffing levels quickly and efficiently to meet demand during periods of extreme volatility.

Seasonal Spikes Are the Rule, Not the Exception

While the 2025 LA wildfires provide a compelling example, they are far from an isolated incident. Seasonal spikes in insurance activity occur nationwide, driven by regional weather patterns and natural disaster cycles. Hurricane season along the Gulf and East coasts, tornado season in the Midwest, and wildfire season in the West all bring predictable surges in claims. Yet, year after year, many insurers find themselves underprepared for these events. They rely on overburdened staff and temporary stopgap measures to manage the workload only to be in catch-up phase during the quiet periods, instead of proactively preparing and strategizing for the upcoming seasons.

The challenge lies in the inherent unpredictability of these events. While insurers can anticipate that hurricanes or wildfires will occur, they cannot predict their frequency, severity or precise impact on their operations. This uncertainty makes it challenging to maintain optimal staffing levels year-round. Overstaffing during quiet periods is financially unsustainable, while understaffing during peak periods can lead to delays, errors and dissatisfied policyholders.

The Real Cost of Being Unprepared

When insurers are unable to manage seasonal spikes effectively, the consequences can be significant. Delayed claim processing times can erode customer trust and damage an insurer’s reputation. Errors made under pressure can lead to costly litigation or regulatory penalties. Moreover, overworked employees are more likely to experience burnout, which can lead to higher turnover rates and additional strain on remaining staff.

For state-mandated insurers like the California FAIR Plan, these challenges are even more pronounced. As an insurer of last resort, the FAIR Plan cannot refuse coverage or control demand. Its role is to provide coverage when private insurers cannot or will not, making it particularly vulnerable to surges in both claims and new policy applications. They merely reflect the extreme of the problem; every insurance organization faces similar issues.

Elastic Staffing Is No Longer Optional

A solution to this perennial challenge is to implement an elastic staffing model. Elastic staffing enables organizations to scale their workforce up or down in response to demand fluctuations, providing a flexible, cost-effective way to manage seasonal spikes.

In the insurance context, elastic staffing could involve leveraging a mix of full-time employees, part-time workers, temporary staff and external contractors. During periods of high demand, such as after a natural disaster, insurers could quickly onboard additional claims adjusters, underwriters and customer service representatives to handle the increased workload. As demand tapers off, these temporary resources could be scaled back to ensure that staffing levels remain aligned with operational needs.

When executed correctly, elastic staffing transforms staffing from a cost center into a strategic lever. Key benefits include:

Improved Customer Experience: By scaling staff to meet demand, insurers can process claims more quickly and efficiently, reducing wait times and improving customer satisfaction.
Operational Resilience: Elastic staffing allows insurers to adapt to sudden changes in demand without overburdening existing employees or compromising service quality.
Cost Efficiency: Rather than maintaining a larger permanent workforce that may be underutilized during off-peak periods, insurers can optimize labor costs by employing temporary or contingent workers as needed.
Workforce Sustainability: By alleviating pressure on full-time staff during busy periods, elastic staffing can help reduce burnout and turnover, fostering a healthier work environment.

Making Elastic Staffing Work in Practice

While the concept of elastic staffing is straightforward, its implementation requires careful planning and execution. Insurers must consider several key factors:

Workforce Planning: Effective elastic staffing begins with accurate forecasting. Insurers need robust data analytics capabilities to predict seasonal spikes and determine staffing needs well in advance.
Talent Pool Development: Building a reliable pool of temporary or contingent workers is essential for successful elastic staffing. This may involve partnerships with staffing agencies, investments in training programs, or maintaining a roster of pre-vetted, trusted vendors who can be called upon when needed.
Technology Integration: Technology plays a critical role in enabling elastic staffing. Cloud-based systems can facilitate remote work for temporary staff, while automation tools can streamline onboarding processes and ensure consistency across teams.
Regulatory Compliance: Insurers must navigate complex regulatory requirements when employing temporary or contract workers. Compliance with licensing requirements, labor laws and data security standards is non-negotiable.
Change Management: Transitioning to an elastic staffing model requires a cultural shift within the organization. Leadership must communicate the benefits of this approach to employees and address any concerns about job security or changes to traditional workflows.

Building for the Next Normal

As the frequency and intensity of extreme weather events increase, the insurance industry must adapt to a new normal of heightened volatility. The lessons learned from events like the 2025 LA wildfires should serve as a wake-up call for insurers across the country. Out-dated staffing models are no longer sustainable in an era defined by unpredictability.

Elastic staffing offers a viable path forward, enabling insurers to remain agile amid uncertainty while maintaining high service standards for their policyholders. By adopting this approach, insurance organizations can not only mitigate operational stress associated with seasonal spikes but also position themselves as trusted partners during crises. The road ahead will not be without challenges. Implementing an elastic staffing model requires investment in technology, training and change management. However, the potential benefits far outweigh the costs. Insurers that take proactive steps now will be better equipped to navigate future crises, protect their bottom lines and fulfill their promise to policyholders when it matters most.

CONTRIBUTORS

FOCUS President, Peter Crowe, began his career in technology consulting, in many cities and a few countries, doing system implementations, upgrades and conversions. A tech project he worked on led to an opportunity at RE/MAX, a real estate franchise company. Crowe joined RE/MAX in 2013 and while there, served in various capacities including senior vice president of marketing, communications and investor relations and executive vice president of Business and Product Strategy.

While looking for strategic opportunities for RE/MAX, Crowe found We Insure, an independent insurance agency network. In 2019, he joined We Insure as chief revenue officer. In this role, Crowe led the expansion of We Insure into 25 new states, growing the agency footprint from 90 to 190 offices in just over two years and supported the founder in a successful exit.

In 2022, Crowe took on the role of president of FOCUS (then named Team Focus Insurance Group). As president, he has been excited to get back to his tech roots and expand one of the insurance industry’s best core platforms and BPO service organizations. Crowe holds a Bachelor of Business Administration from Indiana University and an MBA from the University of Denver, Daniels College of Business.

Nick Lamparelli is Managing Partner of Insurance Nerds, a media and continuing education company dedicated to advancing insurance. He is also a veteran insurance professional, having been an agent, broker and wholesaler before finding catastrophe analytics.

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About FOCUS

FOCUS is an insurance BPO company that provides cloud-based, core administration solutions for P&C insurance companies and MGAs.  FOCUS applies decades of insurance experience to developing insurance outsourcing solutions that complement the company’s extensible InFOCUS Platform, including self-service digital portals, configuration tools, and real-time risk management functionality while the FOCUS Insurance Services’ teams deploy policy, billing, and claims solutions with intuitive automation of workflows and artificial intelligence (AI) applications via state-of-the-art cloud technologies and robust APIs. Through proven technology and quality services, FOCUS is taking the risk out of insurtech for small, mid-size, and growth-focused insurance organizations.

Media Contact:

Kim Tambo
Senior Manager, Product Marketing
Focus Insurance Services
Kim.Tambo@teamfocusins.com
http://www.teamfocusins.com

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