California’s FAIR Plan — Legislature Reforms

California’s FAIR Plan has been growing at a dangerous rate. Changes need to be made. Soon. So, California Insurance Commissioner Ricardo Lara and Assembly Insurance Committee Chair Lisa Calderon want changes to basically reform the FAIR Plan.

Lara and Calderon call the bill the Make It FAIR Act.

Here’s part of the reason why reforms are needed. For just four months from September of 2025 to December 31st of last year the FAIR Plan grew by 4%. For the fiscal year September 2024 to September 2025 the FAIR Plan insured policies increased 39% and the plan now insurers 668,609 properties. The value of those properties — $1.96 billion.

Commercial exposure in fiscal 2025 rose 82% to $49.5 billion.

Another reason for changes is the Department of Insurance’s Report of Examination on the FAIR Plan that found it failing in 17 critical areas. The failures have left wildfire victims with claim delays and denials, and the claims decisions have been inconsistent.

“Since my first year in office, I’ve pushed the FAIR Plan to modernize, expand coverage, meet basic customer‑service standards, and treat policyholders fairly — yet its governing board has resisted key reforms and continues to fight others in court,” Lara said. “The Southern California wildfires and the smoke‑damage crisis didn’t create these failures, they exposed them. Families with standing homes are still fighting for simple answers about contamination and safety, and that is unacceptable. The Make It FAIR Act turns years of our work into enforceable requirements, so the FAIR Plan finally delivers real coverage, real accountability, and real help for wildfire survivors.”

Calderon calls the insurance provided by the FAIR Plan a necessity.

“Property insurance isn’t a luxury in California, it’s a necessity. Californians need a reliable and dependable source of insurance in good times and bad times. The California FAIR Plan is our property insurance safety net and we need this association to work for all Californians,” Calderon pointed out. “As market conditions change, the FAIR Plan needs to evolve to meet these needs, which is why I’ve introduced AB 1680. Californians do not want to be non-renewed but if they are, we need to ensure comprehensive coverage is available. Providing more stability and options at a time when the voluntary insurance market is still playing tug-of-war is needed now, in this moment.”

The legislation — if passed intact — will require the FAIR Plan to make significant operational and governance changes. The bill will allow the FAIR Plan to combine coverage elements. Currently, to get coverage for water damage a policyholder has to purchase it separately. And at additional cost.

More staff will be hired to meet operational needs like consumer claims and complaints.

The bill also requires the FAIR Plan management to come up with a three-to-five year strategic plan. Most insurers have one and Calderon and Lara say the FAIR Plan needs a plan, too. The bill also points out that the FAIR Plan desperately needs capital and liquidity management like other insurance companies.

Source link: California Department of Insurance — https://bit.ly/4rtzcZ2