The California Department of Insurance said Insurance Commissioner Ricardo Lara announced on Feb. 2 legislation to overhaul the California FAIR Plan.
The proposed measure, Assembly Bill 1680, also known as the “Make It FAIR Act,” aims to address customer service, claims handling, and transparency issues within the FAIR Plan. The announcement follows a department examination that found the plan had not fully implemented recommendations related to financial condition, corporate governance, and consumer protections, according to the California Department of Insurance.
The FAIR Plan has seen significant growth in recent years as private insurers have reduced coverage in wildfire-prone areas. The number of active policies under the plan has quadrupled over the past six years, with notable increases in regions such as the Palisades. The plan provides limited fire insurance coverage for property owners unable to obtain policies in the traditional market, ABC10 reported.
Property insurance challenges in high-risk states like California have contributed to growth in the surplus lines market as admitted carriers adjust their exposure. Non-admitted insurers such as Kin now offer coverage in wildfire-affected regions where traditional carriers have scaled back, providing policies with broader perils and limits than basic FAIR Plan coverage. This trend reflects wider shifts in how markets respond to catastrophe risk, Insurance Journal reported.
The California FAIR Plan Association was established in 1968 as a shared market mechanism to provide basic fire insurance for property owners unable to secure coverage through voluntary markets. It is funded by assessments on admitted insurers writing property coverage in California and operates as an insurer of last resort under oversight from the California Department of Insurance, according to CFPNet.
The California Department of Insurance regulates the insurance industry across California and offers consumer resources for various types of insurance. Its services include checking licenses, reporting fraud, and supporting insurance initiatives. The department operates within the insurance regulatory sector and extends its oversight statewide, according to its official website.
