It's true that it may not be possible for insurance underwriters to reliably determine the potential actuarial risks associated with Western properties in wildland-urban interface areas. However, I would argue that it should, at the very least, be possible to set a reasonable upper bound on those risks. The consequence would be extremely high premium quotations. I would have greater respect for an insurance company that at least makes an attempt at quotation, even if the price is unsatisfactory.
Alternatively, Lemonade (or other insurers) could, out of the gate, offer to write a "wrapper" policy (formally called a "difference in conditions" policy) to cover liability and other non-fire risks, while simultaneously doing the paperwork for a CA FAIR Plan policy to cover fire. This approach has become the norm for a great many California homes, but it requires extra phone calls and check writing. If Lemonade were to automate and simplify this process, they'd be ahead of virtually all other insurers here.
You also suggest, and this is where we depart from the specific topic of discussing Lemonade as a potential investment, that living in wildfire-prone environments is a bad idea. While there are certainly risks, I would argue that this is not really comparable with living along seashores or in floodplains. Even in a best-case climate scenario, there's very little that can be done, economically, to prevent the waters from rising. Fire, on the other hand, is preventable in most cases, at least in Southern California. Nearly all dangerous wildfires in SoCal are sparked by humans. (I won't comment on areas outside SoCal because I'm less familiar with the fire patterns further from where I live.) Further, there are obvious actions we can reasonably take to substantially reduce risk, such as building/retrofitting with fire resistant materials, maintaining defensible space, improving land management, and better maintaining our grid infrastructure. Also, by the way, in our particular mountain environment, with the warming of the last decade, the average severity of the seasonal, dangerous "Santa Ana" winds from the desert appears to be lessening (I hope I'm not speaking too soon).
It's worth pointing out that, in preventing fires, one major help will be ending the use of combustion for energy. Countless fires have been started, near us, by fuel-powered vehicles, whether by car fires or by people parking atop dry grass. Chimney fires, gasoline-powered chainsaws, barbecues, etc. are other examples of combustion sources of wildfires. Of course, this ties in with Tesla as an investment! You'll be able to drive a Cybertruck that powers your electric tools and enables portable, inductive cooking. At home, you can run a super-efficient heat pump today, powered by solar and backed up by Powerwalls, that eliminates the need to pollute the neighborhood with wood smoke.
In keeping with Full Disclosure, I do not have any direct stake in this matter. I certainly do sympathize with you and empathize with your frustration - and the only way to keep this On Topic is to couch all this in an overall attempt to glean some and provide some understanding of the underwriting business. So here goes:
You write - "rather than quoting a very high premium based on a data-driven risk assessment (underwriting process), insurers generally throw up their hands and refuse to quote".
At least a part of an answer as to why that frustrating situation exists might be in something you had written a paragraph earlier: "===>If<=== they could figure out a way to write a primary homeowners policy for my home in the SoCal mountains..."
Whether the following is the case or not I do not know but I easily can see a situation where it is: The underwriter do not because they cannot reliably determine their actuarial risks. They are in terra incognita here and, absent some guidelines or directives from the state's Insurance Commission - who themselves also may not be better able to weigh the consequences - it is in their fiduciary duty not to write a policy at all.
Now, looking at it another, more brutal way - tough, because it directly and severely can affect you and that other one-quarter of CA homeowners you mention (and I am ignorant of the CA FAIR Plan but that matters not to my argument) - is that, ecologically, dissuading (if you like, dissuading with extreme prejudice) a party from building, buying, owning or keeping a domicile in that particular ecosystem is, in the long run, good for that party, for the local and state economy, and for that portion of the environment. To my way of seeing things, it is no different from dissuading (forbidding) anyone from constructing along most seashores or floodplains. That should not be done. We know this....but collectively as a society we are the frogs in a slowly warming pot. Unlike frogs, we know how it turns out.
