In recent years, hundreds of thousands of Californians have purchased home insurance from a state-managed "last resort" insurance pool that has grown rapidly as private insurance companies have fled the market.

Now, in the wake of the devastating Los Angeles wildfires earlier this year, the Fair Access to Insurance Requirements (FAIR) Plan is seeking approval from the state for an average 36% rate hike, which would further squeeze homeowners who have no other options for coverage.

Insurance experts say it's a national warning sign, as the effects of climate change cause private insurance companies to pull back on coverage in disaster-prone areas, leaving states and their residents to assume more of the risk. Fewer homeowners will be able to purchase private insurance in the future, and even those who do may face higher premiums as companies charge more to pay for the FAIR Plan losses.

In some states, these state-managed insurance plans have grown from a handful of policies, as originally intended, to hundreds of thousands of homeowners. The plans charge high premiums and provide limited coverage.

"It was supposed to be a stopgap measure. People are supposed to be on a FAIR Plan policy for a short amount of time, but with climate change and these extreme weather events, that's not going to happen," said Alfonso Pating, global financial regulation analyst with the Natural Resources Defense Council, an environmental nonprofit.

At present, 35 states and the District of Columbia offer FAIR Plans or Citizens Plans to homeowners who can't find coverage on the private market. The plans are managed by state governments, with the financial backing of the private insurers doing business in that state.

The plans maintain enough reserves to cover payouts for an average year. But when the plans take heavy losses, they impose an assessment on a pool of the insurance companies doing business in the state, based on their market share.

These state-managed plans were initially created to cover a small number of properties as a temporary, last-resort option. But now, as wildfires and hurricanes have pushed insurance companies to retreat from certain areas, FAIR Plans cover nearly 3 million properties nationwide, with an exposure exceeding $1 trillion, according to data issued last year by the Insurance Information Institute.

"If it's going to keep on growing, it becomes impossible to manage the risk," Douglas Heller, director of insurance with the Consumer Federation of America, a research and advocacy nonprofit, said in an interview earlier this year. "It's OK if the high risk is just a small pool, but if the private sector is unwilling to take any of the high-risk [policies], that model doesn't work anymore."

In California, the FAIR Plan reached its breaking point following the January wildfires that devastated Los Angeles. In the months before the fires, insurance companies had dropped coverage in many neighborhoods of the city, causing the state-backed insurer to take on policies covering billions of dollars.