> the most substantial wildfire or fire following earthquake hazards

The key here, and what insurance companies really don't like dealing with, is coordinated payouts.

If you insure 10,000 homes, and 10 burn down every year, that's quite manageable. If instead you have years with nothing and then a thousand burn down at the same time, that's much harder to manage. It's also harder to build the actuarial tables, because there's too many unknowns.

And wildfires and earthquakes almost by definition affect large areas.