The Assembly Insurance Committee convened on May 28, 2025, to discuss significant developments in California's insurance market, particularly focusing on the Fair Plan and its evolving role amid increasing policyholder numbers and market challenges.

The meeting began with a report on the growth of the Fair Plan, which has seen a remarkable 40% increase in policy count and a 60% rise in exposure over the past year. As of March, the Fair Plan reported nearly 575,000 policies and close to $600 billion in exposure. This growth is attributed to the withdrawal of major insurers like State Farm, leading to a surge in new business, particularly in areas with low wildfire risk.

The discussion highlighted a shift in the types of policies being issued, with a notable increase in suburban tract homes rather than the typical urban properties. This change reflects a broader trend where customers from various backgrounds are seeking coverage, emphasizing the Fair Plan's commitment to supporting its policyholders.

A key topic was the concept of "depopulation," which refers to the transition of policyholders from the Fair Plan to the private insurance market. The committee noted that effective depopulation requires adequate rates in the private market, as many policyholders would not leave the Fair Plan if they find comparable or lower rates elsewhere. The Fair Plan's current structure lacks a direct mechanism to facilitate this transition, underscoring the need for collaboration with the California Department of Insurance (CDI) to create sustainable insurance strategies.

The committee also addressed legislative measures impacting the Fair Plan, including AB 290, which aims to extend grace periods for policy renewals, and SB 525, which proposes changes to coverage for manufactured homes. The latter could potentially double the number of policyholders under the Fair Plan if enacted, raising concerns about the plan's capacity to manage such an influx.

In conclusion, the meeting underscored the Fair Plan's ongoing growth and the challenges it faces in transitioning policyholders to the private market. The committee emphasized the importance of maintaining actuarially sound rates and collaborating with stakeholders to ensure the stability and sustainability of California's insurance landscape. The next steps involve continued monitoring of market trends and legislative developments that could impact the Fair Plan's operations and policyholder experience.