The Assembly Insurance Committee meeting held on May 28, 2025, focused on critical discussions surrounding the California Fair Plan and its financial viability amid increasing insurance demands. The meeting highlighted the Fair Plan's current financial standing, which reported $4.4 billion in funds against a staggering $600 billion in exposure, raising concerns about sustainability and the need for strategic adjustments.

The committee addressed the Fair Plan's disbursement practices, noting that historically, funds were returned to member companies when available. However, this year, the decision was made not to disperse funds, as the $400 million available was deemed insufficient to significantly impact individual companies. Instead, these funds are being retained to cover losses without resorting to an assessment process, which could burden policyholders.

A significant point of discussion was the growth of policyholders in non-fire designated areas, which was described as counterintuitive. The Fair Plan's representatives explained that many individuals in these areas are turning to the Fair Plan due to limited options from larger carriers, which have either restricted their writing or ceased operations altogether. This trend is exacerbated for homeowners with multiple losses or those with older, poorly maintained properties, making them undesirable for traditional insurers.

The representatives also noted that the Fair Plan offers competitive pricing, which attracts customers even in non-wildfire areas. For instance, a policyholder shared an example where the Fair Plan's premium was significantly lower than quotes from other insurers, prompting a shift to the Fair Plan for more affordable coverage.

The committee emphasized the need for the admitted market to re-engage and develop mechanisms to transition customers back from the Fair Plan to traditional insurance markets. This transition is crucial for maintaining the viability of the Fair Plan and ensuring that it can continue to serve its purpose effectively.

In conclusion, the meeting underscored the pressing challenges facing the California Fair Plan, including financial sustainability and the need for strategic reforms to address the growing demand for insurance in both fire and non-fire designated areas. The committee plans to continue discussions on these issues, aiming to foster a more robust insurance market in California.