[{"_1":2,"_117":-5,"_118":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,76,88,100,110],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},"mediaId",6695119,"mediaKeyId","3555886-eb558828d5dd2d44fe777e7594e31cb1","parentId",3555886,"title","Fair Plan growth in low-risk areas complicates depopulation; lawmakers hear clearinghouse and other legislative fixes","audioSeconds",530,"startMs",2646000,"endMs",3176000,"viewUrl","/Search/View?dp=1&key=3555886-eb558828d5dd2d44fe777e7594e31cb1&start=2646&end=3176","thumbnailUrl","https://assets.pipeline.soar.com/3555886-eb558828d5dd2d44fe777e7594e31cb1/thumbnail_2646000.jpg","articleUrl","/articles/6695119/California/Fair-Plan-growth-in-low-risk-areas-complicates-depopulation-lawmakers-hear-clearinghouse-and-other-legislative-fixes","mediaUrl","https://secure.pipeline.soar.com/6695119-42a1c60768abc118e56c9c03f5b03d50/orig.mp4?Expires=1770534476&Signature=W6ET8GTM0UVYv-r9KPFf0BktUaXf3ld9Wds1NpFwOqt1Ed2hX71goB1GXE187Ym2y-QYH~~BQ0gJRTGnt77yComsL9FEL7eLSXL5aLX6wzFqdIK77WyzPiXDIB~t3fAn1CNi6-V9ODIqrtKvZ86Yy4vCYLlQ6cVrNBjyhJjPIqLkem-hwDUWQbbdolG~xt7oS1~yY7kCWiqkuxUfCJHFZBvPUpHK3J6s8wTNCwY-LUU0JHyeWFzdKJbBjFW29wqMF63SS0RgaTDFo39FEYL5PYoHFj5X7E4mm9KkJaCjEyvdnpRNIYJ3IwogbqkGfBZEP6lYiITqbMlmY63WBYVGQw__&Key-Pair-Id=KUT5TJCACFTXG","author","House","date","2025-05-28T00:00:00Z","article","Growth of California Fair Plan policies into non-wildfire areas and several pending bills to adjust coverage and market mechanics were central topics at an Assembly Insurance Committee oversight hearing.

Victoria Roach, president of the California Fair Plan, told the committee the plan’s growth has accelerated since 2018 and that the organization is ‘‘closer to a take-all comers’’ approach than intended — in part because admitted carriers have reduced writing across some areas. ‘‘We are the insurer of last resort,’’ Roach said. ‘‘Today, that's not what's happening... people are coming to us first.’’

Nut graf: Committee members heard that depopulation — moving policyholders from the Fair Plan back to admitted carriers — depends on multiple factors: availability of admitted-market capacity, actuarially sound Fair Plan rates that do not undercut the admitted market, and operational tools such as the statutorily created Clearing House and proposed legislative changes.

Clearing House and market mechanics

Armand Feliciano described the Clearing House as a legislatively created platform intended to facilitate negotiations between private-market carriers and brokers to place Fair Plan policyholders into admitted coverage. Under current statute, the Clearing House is a platform but the Fair Plan cannot unilaterally move a policyholder; placement requires agreement between the private carrier and the policyholder’s broker.

Pending legislation and coverage expansion

Testimony summarized several bills under consideration or passed that affect the Fair Plan’s scope and customer profile: SB 11 expanded coverage for farms and wineries in 2021; the Department of Insurance increased certain dwelling and commercial limits in 2021–2025 (residential dwelling limits from $1.5 million to $3 million; commercial builders limits increasing toward $100 million per location). The Fair Plan also flagged AB 290 (extend grace periods for renewals), SB 525 (manufactured-home replacement-cost coverage), and AB 69 (depopulation mechanisms) as bills with potential impact.

Industry perspective

Speakers from industry trade groups told the committee they view Fair Plan growth as a market-health signal. Dan Dunmore of the California Building Industry Association said, ‘‘You should look at the Fair Plan as an indicator on the health of the regular market. The more it grows, the more unhealthy the regular market is.’’ John Norwood of the Independent Insurance Agents and Brokers of California said independent agents have fewer admitted-market placement options now, increasing placements into the Fair Plan.

Why depopulation is difficult

Roach and Feliciano outlined three barriers to depopulation the committee should address: (1) the admitted market must have capacity and willingness to write business again; (2) Fair Plan rates must be actuarially sound and generally not lower than admitted-market pricing in non-wildfire areas; and (3) operational depopulation tools (Clearing House and broker cooperation) must function smoothly. Feliciano noted cases where Fair Plan premiums in low-wildfire areas were materially cheaper than admitted-market alternatives, which reduces the incentive for policyholders to move.

Ending: Oversight and next steps

Members asked the Fair Plan for more granular data on nonrenewals, new policies, premium comparisons and county/ZIP-level concentrations. Fair Plan representatives agreed to follow up. Lawmakers and stakeholders urged a coordinated mix of rate filings, regulatory action under CDI’s Sustainable Insurance Strategy, and targeted legislation to restore admitted-market participation and enable depopulation.","mediaType","Video","parentTitle","Assembly Insurance Committee","oneSentenceSummary","Growth of California Fair Plan policies into non-wildfire areas and several pending bills to adjust coverage and market mechanics were central topics at an Assembly Insurance Committee oversight hearing.","taxTitle","California State Assembly, House, Legislative, California","taxId",17099,"location","California","headline","","shortSummary",{"_33":77,"_35":36,"_37":38,"_39":78,"_41":79,"_43":80,"_45":81,"_47":82,"_49":83,"_51":84,"_53":85,"_55":56,"_57":58,"_59":86,"_61":62,"_63":64,"_65":87,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6695136,"California Fair Plan says $1 billion assessment, $2.9 billion paid so far after Jan. 7 wildfires; policy count and exposure surge",4686,1911000,6597000,"/Search/View?dp=1&key=3555886-eb558828d5dd2d44fe777e7594e31cb1&start=1911&end=6597","https://assets.pipeline.soar.com/3555886-eb558828d5dd2d44fe777e7594e31cb1/thumbnail_1911000.jpg","/articles/6695136/California/California-Fair-Plan-says-1-billion-assessment-29-billion-paid-so-far-after-Jan-7-wildfires-policy-count-and-exposure-surge","https://secure.pipeline.soar.com/6695136-18df2f31d80fae2ddcfb969effc27739/orig.mp4?Expires=1770534476&Signature=nE~A5Mb9~hmrZFR-x9cyRc0m0lj4WLuF0BG9MkUougZTXZNzJUeMWZclgq2PaHd0PU-dO14FNKtuWDTRBTqJF5uryDfgWe~32hsupZHifwtUb2heg5H9bj56jbQMqtTren4ksT9wt8vzT38dLa~lNwWjg7g~2Xfe6-KNTvGeYUZP2KOpGhLom1W4gZnly3lt2J7fX~qRYBfmRUv1IYcmvMt4lUbAhf53XNvawoLj1QMMlaVWnJVUUu4wO9hK71MouyfKsU-6xM14BStBRIPXpA85SSXI7WnH3vUbbkOklsy3szNWTHxyUSshPSoqQklEb2D4TLXW2UJsxYT4GtsLmg__&Key-Pair-Id=KUT5TJCACFTXG","The California Fair Plan told the Assembly Insurance Committee on Oct. 29, 2025, that it requested a $1 billion assessment on its member insurers after the Jan. 7 wildfires and has paid about $2.9 billion in claims to date, with an estimated $4 billion in total losses once claims are complete.

Victoria Roach, president of the California Fair Plan, said the plan has grown rapidly: \"We are now at about $599,000,000,000. We're closing in on $600,000,000,000 as of March 31,\" referring to insured exposure, and that policy count has climbed to roughly 575,000 policies. Armand Feliciano, speaking for the FAIR Plan, described the board and accounting-committee process that led to the assessment and said the board \"unanimously agreed we needed to assess. They agreed a billion dollars was the right number.\"

The committee was told why the Fair Plan — created by the Legislature in 1968 as an insurer of last resort — has become a first stop for many Californians. Roach said the voluntary (admitted) market and surplus lines carriers are not offering sufficient capacity across the state, so consumers are \"coming to us first\" for reasons of price and availability. \"Sometimes they're coming to us because of price, and sometimes they're coming to us more often because they just can't get insurance anywhere else,\" she said.

Why it matters: the Fair Plan is a residual market intended as a temporary safety net until policyholders can return to the admitted market. Large, sustained growth and concentrated wildfire exposure increase the risk the plan will need industry assessments to cover large loss events or be unable to pay claims promptly.

Assessment and reinsurance: Fair Plan officials described the statutory assessment mechanism and the way reinsurance works with the organization’s new reinsurance tower. Feliciano said the Fair Plan’s new reinsurance program leaves the organization responsible for the first $1.25 billion of loss for a single event. He explained assessments were calculated by pool year and member market-share and that more than 80% of the assessed funds were remitted within the first ten days.

Claims response and payments: Fair Plan staff said they received over 5,500 claims from the recent fires, roughly half categorized as total losses, and had closed more than 3,000 claims with approximately 2,400 still open at the time of testimony. Roach said the Fair Plan has paid more than $2.9 billion so far and expects payouts to approach $4 billion overall. The plan expanded staff temporarily — adding several hundred adjusters and desk staff — and extended customer service hours and outreach in affected communities.

Smoke claims: The Fair Plan stressed that its policy covers \"smoke and fire when there's direct physical loss.\" Roach told the committee that smoke alone is not necessarily a covered loss unless it produces a demonstrable physical change to property; examples include permanently damaged electronics, carpeting or furniture that cannot be restored. \"If it needs to be repaired so if it needs to be, deodorized, we will deodorize,\" she said. The plan said it sends independent adjusters to inspect claims and will reassess claims if damage appears after initial cleaning.

Financial stability and depopulation: Committee members pressed the Fair Plan on long-term solvency. Roach said the organization has worked with the California Department of Insurance (CDI) and the Legislature on several initiatives intended to open the market and help the Fair Plan depopulate — that is, move policyholders back to the admitted market. Feliciano described a Clearing House platform established by legislation to facilitate transfers from the Fair Plan to private carriers but noted the Fair Plan does not control broker or private-carrier decisions: the broker and the private insurer must agree to place the business.

Legislation and tools discussed: witnesses identified several bills and regulatory items bearing on Fair Plan operations, including AB 226 (access to line-of-credit and bonds), AB 290 (renewal grace-period provisions), SB 525 (replacement coverage for manufactured and mobile homes), and AB 69 (depopulation measures). Roach and Feliciano said the Fair Plan supports AB 226 to obtain a line of credit and bond access to increase short-term liquidity and reduce near-term reliance on assessments.

Rates and market signaling: Fair Plan witnesses said their average dwelling premium rose from about $1,839 in 2021 to roughly $2,800 in 2025 while average policy limits rose from about $684,000 to just over $1 million. Feliciano and Roach said actuarially sound rates are critical: if Fair Plan rates are lower than the admitted market in low-fire-risk areas, there is less incentive for policyholders to leave. The Fair Plan said it is filing with CDI to seek rates that better reflect expected losses and operating costs.

Public comment and industry views: Representatives from the California Building Industry Association and the Independent Insurance Agents and Brokers of California told the committee that Fair Plan growth signals a weakened voluntary market and urged quicker market re-engagement, adequate rates and legislative tools that enable depopulation.

Looking ahead: Fair Plan leaders said they are increasing transparency by posting data, policy forms and financial reports on their website and will continue outreach in affected communities. They urged completion of regulatory and legislative reforms to re‑open admitted-market capacity and make depopulation feasible. The committee requested follow-up data on nonrenewals, claim denial rates and granular claims-payment statistics; Fair Plan staff committed to follow up in writing.","At an Assembly Insurance Committee oversight hearing, California Fair Plan leaders described rapid growth in policies and exposure, explained a $1 billion assessment on member insurers after Jan. 7 wildfires, and outlined steps to shore up finances and help policyholders with claims and depopulation.",{"_33":89,"_35":36,"_37":38,"_39":90,"_41":91,"_43":92,"_45":93,"_47":94,"_49":95,"_51":96,"_53":97,"_55":56,"_57":58,"_59":98,"_61":62,"_63":64,"_65":99,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6695124,"Fair Plan reports $2.9 billion paid on January wildfire claims so far and outlines how smoke damage is evaluated",271,4222000,4493000,"/Search/View?dp=1&key=3555886-eb558828d5dd2d44fe777e7594e31cb1&start=4222&end=4493","https://assets.pipeline.soar.com/3555886-eb558828d5dd2d44fe777e7594e31cb1/thumbnail_4222000.jpg","/articles/6695124/California/Fair-Plan-reports-29-billion-paid-on-January-wildfire-claims-so-far-and-outlines-how-smoke-damage-is-evaluated","https://secure.pipeline.soar.com/6695124-60899cef898e6c0308ab92ad9b4df750/orig.mp4?Expires=1770534476&Signature=fe2CazMUYAp4-6YP41PU1qVRhCr-YjPFeNHerv16fZS2oi~TOXQ4jimbswMo6H-JB7daVQopYpTEo2KPkFYuFX1xN~JBlYUpMWdOT3JnmKjJyzu11rX69E3JlO4oUb6h8Xv4QsgqwTa1fPzQzoEqZC89Rm0A3IENcKLhl26shUx3gQVLtY6iBxd0uTtmqf-e-WZV7Ubqf0AIurwZ5taic9SEtDlZDmqpZ4JfQOWjFu0sHtOibSS9RmpP7fEIhr-EVPFtz49iDY3f87tOl072CeTorUsWTi8yOvGnyX54wbxXtw13bc666fHjdckamCtiCugaSueZTgG2kprNYO330g__&Key-Pair-Id=KUT5TJCACFTXG","The California Fair Plan told an Assembly Insurance Committee oversight hearing it has paid more than $2.9 billion on claims from January wildfires and outlined how it determines coverage for smoke or ash damage.

Victoria Roach, president of the California Fair Plan, said the plan had received more than 5,500 claims from the January events and estimated final payments could total about $4 billion. ‘‘We have paid over $2,900,000,000 in claims so far. Our estimate is that we're gonna pay close to $4,000,000,000 total when all is said and done,’’ Roach said.

Nut graf: Fair Plan leaders told lawmakers the organization prioritized advancing funds for total losses and expanding claims capacity, and explained its policy language requires ‘‘direct physical loss’’ before smoke-only claims qualify for indemnity.

How claims were handled

Roach said the plan advanced 50% of Coverage A immediately for confirmed total-loss claims and paid personal-property limits (up to certain thresholds) to help displaced homeowners. The plan temporarily expanded claims capacity by contracting over 300 additional adjusters and desk staff within three weeks to process surge volume, Roach said.

Smoke and ash: the coverage standard

Feliciano clarified the Fair Plan’s policy forms, which are filed with and approved by the Department of Insurance, cover smoke and fire when there is ‘‘direct physical loss’’ or physical damage. ‘‘The smoke or ash in a house is not necessarily covered if it hasn't damaged anything,’’ he said. ‘‘If it needs to be deodorized, we will deodorize. If it's beyond repair, we'll cover it.’’

He and Roach described typical scenarios: surface ash that can be cleaned is not a payable loss, but porous materials or goods that are altered beyond repair (for example, furniture or electronics with embedded soot or irreparable odor) can qualify as direct physical loss and be replaced.

Claims volume and status

The Fair Plan reported it had closed more than half of claims and had approximately 2,400 open claims remaining at the time of testimony. Roach said many closed, unpaid claims were duplicates from policyholders who submitted multiple notices during an urgent period; outright denials were described as relatively few but not quantified. Committee members requested follow-up data on denials and partial denials.

Ending: outreach and customer service

Roach said the plan extended customer service hours, participated in FEMA recovery centers and local town halls, and provided daily broker webinars to explain claims procedures. She said the plan posted additional data on its public website, including zip-code and county-level policy counts and its plan of operation, to improve transparency.","Fair Plan officials told an Assembly committee they have paid about $2.9 billion on January wildfire claims to date, estimate roughly $4 billion total, and described their policy standard for smoke losses — coverage requires evidence of direct physical damage before payment.",{"_33":101,"_35":36,"_37":38,"_39":102,"_41":103,"_43":80,"_45":104,"_47":105,"_49":83,"_51":106,"_53":107,"_55":56,"_57":58,"_59":108,"_61":62,"_63":64,"_65":109,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6695129,"California Fair Plan orders $1 billion assessment after January wildfires, warns rapid growth threatens solvency",1869,3780000,"/Search/View?dp=1&key=3555886-eb558828d5dd2d44fe777e7594e31cb1&start=1911&end=3780","/articles/6695129/California/California-Fair-Plan-orders-1-billion-assessment-after-January-wildfires-warns-rapid-growth-threatens-solvency","https://secure.pipeline.soar.com/6695129-e5251a5c36ad3bbc25ef3ff27703f1f6/orig.mp4?Expires=1770534476&Signature=Vtn5vvLYsD4h0RaDZKSxHVy52MVA8cyEkPKLLMLeU1GoEULWj1hgMimkKo8QTQqDm7l0K4QMzX7fQA5jeeFeI9HjDnruKrAVnx-7kMzu0N3d3~cmkjXPblYQp8uFZhzjTNzOWE6wL-IaCVAffAiMeF6xcjS9XBRz7BrlIh~4nm5CsBYdvEUbZTxnT68PBS0y6~-AtJyWWBYTDwJ17eRV3tBRwfBsG0qK~5OsqKpvx2zlu0WQp8b8ET8ghmriKuvebXzpwkcvc3DYHV-BkLqUwthtmYRZFipCW-yi0ukLJKiuWaCZaILr2oJu86Vvl5TtPPz6IqAPgviP1U3q0IRh1g__&Key-Pair-Id=KUT5TJCACFTXG","The California Fair Plan asked its member insurers for $1 billion after the January wildfires and warned the state’s residual insurer is growing faster than its financial resources, Fair Plan leaders told the California State Assembly Insurance Committee.

Victoria Roach, president of the California Fair Plan, told the committee the plan ‘‘is not a state agency. We are not state funded, and we are not taxpayer funded. We are a not for profit.’’ She said the plan’s role is to be ‘‘the insurer of last resort’’ — a temporary safety net for policyholders who cannot obtain coverage in the admitted market.

The plan reported that as of March 31 it was insuring about 575,000 policies and had nearly $600 billion in exposure. Armand Feliciano, representing the Fair Plan, described how its accounting committee and board concluded the organization would need to assess member insurers after the January losses. ‘‘The board unanimously agreed we needed to assess. They agreed a billion dollars was the right number,’’ Feliciano said.

Nut graf: The assessment reflects how large, unexpected catastrophic losses — and a shift of policies into the Fair Plan from the admitted market — can exhaust the Fair Plan’s reserves and reinsurance. Fair Plan leaders urged legislative and regulatory options to reduce reliance on member assessments, including access to lines of credit and bonds.

Board action, assessment process and reinsurance

Feliciano explained the Fair Plan’s assessment process is set by statute and by the plan’s governance: finance staff project claim payments and available reinsurance, an accounting committee (including member-company representatives and a Department of Insurance representative) recommends whether to assess, and the plan’s board approves and sends the request to the California Department of Insurance (CDI). Under the plan’s procedures, member companies are billed based on market-share formulas tied to prior pool years and generally have 30 days to remit their assessment.

Roach and Feliciano described a layered risk-transfer approach. The Fair Plan has purchased reinsurance but faces a large first-loss layer: under the plan’s current reinsurance placement, the Fair Plan is responsible for the first roughly $1.25 billion of losses from a single event. Reinsurance capacity and the timing of payments affect how quickly the plan must move to assessment to ensure timely claim payments.

Funding proposals and legislative measures

Fair Plan leaders said they support AB 226 (author names given in testimony) to authorize access to additional funding mechanisms, including a line of credit and possible bond authority, to provide flexibility between claim payments and assessment timing. Roach and Feliciano said a line of credit would not eliminate assessments but would give the plan time and liquidity to manage cash flow and access reinsurance proceeds.

What it means for policyholders and member companies

Roach said the Fair Plan’s statutory mission is to ‘‘assure stability in the market’’ and to encourage the admitted market to serve policyholders. But she said growth into previously low-risk areas and the volume of new business make the Fair Plan more of a permanent insurer for many customers rather than a temporary stopgap. Failing to reach actuarially sound rates for Fair Plan coverages also reduces incentives for policyholders to return to the admitted market, she added.

Quotes and timetables

Roach reported the plan’s average dwelling premium rose from about $1,839 in 2021 to about $2,800 in 2025 and said the Fair Plan is working with CDI on future filings to reach ‘‘actuarially sound rates.’’ Feliciano warned that if wildfire season brings additional large events or a string of smaller events, the Fair Plan could face additional assessment needs quickly.

Ending: Next steps

Committee members pressed Fair Plan staff for further data and asked the plan to provide follow-up numbers on renewals, nonrenewals and closed-denied claims. Fair Plan representatives committed to providing additional information to members after the hearing. The plan and stakeholders urged legislative action to expand liquidity options and to support market reforms aimed at depopulation of the Fair Plan back into the admitted market.","The California Fair Plan told an Assembly Insurance Committee oversight hearing the insurer of last resort assessed member companies $1 billion after January wildfires and warned continued rapid growth and concentration of exposure—now about $600 billion statewide—threaten its ability to operate without industry assessments or new funding tools.",{"_33":111,"_35":36,"_37":38,"_39":112,"_41":79,"_43":80,"_45":81,"_47":82,"_49":83,"_51":113,"_53":114,"_55":56,"_57":58,"_59":115,"_61":62,"_63":64,"_65":116,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6695132,"California Fair Plan outlines $1 billion assessment, reinsurance limits and depopulation hurdles after January wildfires","/articles/6695132/California/California-Fair-Plan-outlines-1-billion-assessment-reinsurance-limits-and-depopulation-hurdles-after-January-wildfires","https://secure.pipeline.soar.com/6695132-1e04ed5ada049dd4935a2262a7178868/orig.mp4?Expires=1770534476&Signature=TTyazyNscJOLD8~WqwZea22yJJ97EwAfNXBHgAL0Czp6ogtm1zjvzgcRHJv7Yy49FGeQZdup4284cPagEl7DB1RGlL0TAuVlRvTXhjkWKlStwT7alakndy07hGtIRKO1wBGUw-dZqiONTC0ijb0fG2rbAvJAiJWmHRLBIAbUmbbae8ERNRl3NVRR1ObjpeW4~BurLctWFNdGlRuc2OWtJAQMuy-MB7y-2sThYZ0G08QXxC6ZDKZtjXsValfdZBJpMnqgv-JLd745ph4aqVv47e8sSkeWdLF8ZDt9CbwNLZXZMALjhMYF1rAfqd9e9qs9gwaK~uFqdcCqC9ZaP9GSbA__&Key-Pair-Id=KUT5TJCACFTXG","California Fair Plan officials told the California State Assembly Insurance Committee on Oct. 29, 2025, that the plan’s membership and exposure have grown rapidly in recent years, that a board-approved $1 billion assessment of member insurers was requested after Jan. 7 wildfires, and that the plan is pursuing rate changes, new funding tools and market reforms to avoid future assessments.

The hearing, an oversight briefing by Victoria Roach, president of the California Fair Plan, and Armand Feliciano, a Fair Plan representative, focused on the plan’s role as the insurer of last resort, the mechanics of the January assessment, reinsurance limits, claims handling after the Palisades and Eaton fires, and legislative and regulatory steps—such as AB 226 and the Department of Insurance’s sustainable insurance strategy—intended to restore a functioning private homeowners market (the “admitted market”).

The Fair Plan’s role and why the hearing matters

The California Fair Plan was established by the Legislature in 1968 as a residual market to provide coverage only when consumers cannot obtain insurance through admitted carriers. \"We are the crutch to get them through the crisis and back into the market,\" said Victoria Roach, president of the California Fair Plan. Roach and Feliciano told committee members that the plan has increasingly become a first stop for consumers rather than a temporary safety net, driven by a shrinking voluntary market and by examples where Fair Plan pricing is lower than private-market alternatives in some non‑wildfire areas.

The Fair Plan reported nearly 575,000 policies and about $599 billion in exposure as of March 31, 2025. Officials said policy counts and exposure have grown sharply since 2018, with a 40% year‑over‑year increase in policies and a 60% increase in exposure reported for 2024; similar growth was tracking in the current fiscal year. That growth, Roach said, is “exponential” and concentrates risk across the state, including in areas not normally classified as high wildfire hazard.

Assessment and reinsurance: what the Fair Plan did and why

After the Jan. 7 wildfires, the Fair Plan’s accounting committee and board concluded the plan would lack funds to pay projected claims and recommended an assessment of member companies. \"The accounting committee... recommended that we assess a billion dollars,\" Armand Feliciano said. The board unanimously agreed and the Fair Plan submitted the request to the California Department of Insurance (CDI), which approved the assessment process and the billing to member companies.

Officials explained how assessments are calculated: the Fair Plan groups affected policies by fiscal/pool year and assesses member companies according to market share for the relevant pool year; companies then have 30 days to remit the assessed share. Feliciano said more than 80% of the assessed money was remitted within the first 10 days. He emphasized that assessments are a statutory mechanism built into the plan’s structure.

Reinsurance is the Fair Plan’s other primary backstop. The plan described a reinsurance tower with an initial layer of $1.25 billion that the Fair Plan must absorb before reinsurance attaches. Feliciano warned that multiple separate events can exhaust the Fair Plan’s resources without breaching a single-event reinsurance layer, because reinsurance responds per declared event. That structure, plus the Fair Plan’s growing exposure, is why officials said the plan needs higher actuarially sound rates and additional financing options such as a line of credit or bond authority to avoid frequent reliance on assessments.

Claims handling and payments after the Jan. wildfires

The Fair Plan reported about 5,500 claims from the January fires, with close to half reported as total losses. Officials said they have paid more than $2.9 billion so far and estimated total ultimate payments near $4.0 billion. The plan said it has closed more than half the claims and about 2,400 remain open. For total-loss claims the Fair Plan said it advanced 50% of Coverage A at first loss notice and paid full policy limits when replacement-cost estimates validated the amounts; personal-property advances were also made (for many claims the personal-property amounts were paid quickly, up to specified thresholds).

On smoke and ash claims, Roach explained the Fair Plan’s policy is to pay when there is direct physical loss: \"Our policy... covers smoke and fire when there's direct physical loss. The smoke or ash in a house is not necessarily covered if it hasn't damaged anything.\" She described an adjuster process: an independent adjuster inspects, photographs and reports; if items or structures show physical alteration (for example, irreparably damaged furnishings or structural staining), the Fair Plan pays for repair or replacement and may deodorize or otherwise remediate when appropriate. The plan acknowledged disputes arise and said denied claim notices inform consumers of the right to file a complaint with the Department of Insurance.

Depopulation, clearinghouse and market fixes

Roach and Feliciano described depopulation—the movement of Fair Plan policyholders back into the admitted market—as the central long‑term goal. They said the Fair Plan lacks a unilateral mechanism to move people out; depopulation requires a functioning private market, brokers willing to place business with admitted carriers, and pricing that makes the private market competitive with Fair Plan rates. Feliciano described the Clearing House mandated by recent legislation as a platform to facilitate offers from private-market carriers to place Fair Plan policyholders, but stressed the Clearing House does not force a transfer without broker and policyholder agreement.

Several bills were mentioned as relevant to the plan’s finances or coverage scope: AB 226 (authorizing financing mechanisms including lines of credit and potential bond access for the Fair Plan), AB 290 (extension of grace periods for renewals), SB 525 (replacement-cost coverage for manufactured and mobile homes, which supporters estimate could affect ~500,000 policyholders), and AB 69 (a depopulation bill). The Fair Plan said it supports AB 226 to expand short‑term liquidity options, and it noted the potential impact of SB 525 if replacement-cost coverage for mobile homes were required.

Questions from committee members and public comments

Assembly members pressed officials on the unusual growth in low‑wildfire‑hazard areas, the mix of customers who remain with the Fair Plan, historical rate changes and the adequacy of the plan’s governance and transparency. Roach said average Fair Plan dwelling premiums rose from roughly $1,839 in 2021 to about $2,800 in 2025 while average policy limits rose from about $684,000 to over $1 million. She said the Fair Plan had not paid prior surpluses back to member companies in the months before the fires, reasoning that retained surplus would support claims payment capacity.

Public commenters including Dan Dunmore of the Building Industry Association and John Norwood of the Independent Insurance Agents and Brokers of California urged legislative action to re‑engage the admitted market and described current growth of the Fair Plan as an indicator of an unhealthy voluntary market.

What the Fair Plan asked the Legislature to consider

Fair Plan officials asked the Legislature and CDI to support: moves to get rates to actuarial soundness, mechanisms to provide liquidity (AB 226), continued development and use of the Clearing House and the CDI’s sustainable insurance strategy to reopen the admitted market, and regulatory or programmatic approaches used in other states to limit residual‑market eligibility where an admitted alternative exists. Roach said the Fair Plan is not taxpayer funded and urged policy and regulatory fixes designed to return policyholders to the private market.

Ending note

Officials committed to follow up with committee members on specific data requests, including more granular counts of new, renewed and nonrenewed policies and denial/appeal statistics. \"I'm happy to follow‑up,\" Armand Feliciano said when asked to provide additional figures. The hearing record shows the Fair Plan now faces near‑term financial pressure from concentrated exposure and potential future wildfires, and the agency and stakeholders identified a combination of rate, regulatory and financing changes they say will be necessary to reduce the chance of future member assessments.","At an Assembly Insurance Committee oversight hearing, California Fair Plan officials described rapid policy growth, a $1 billion member-company assessment after Jan. 7 wildfires, paid claims so far and barriers to moving policyholders back to the admitted market.","actionData","errors"]

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