The Assembly Insurance Committee convened on May 28, 2025, to address critical issues surrounding insurance claims related to wildfire damage, particularly focusing on smoke claims and the solvency of the FAIR Plan. The meeting highlighted the complexities of defining "direct physical loss" in the context of smoke damage, a pressing concern for many constituents affected by wildfires.

The discussion began with a representative questioning the clarity of definitions surrounding smoke claims. They noted that while a home may still be structurally intact, the presence of smoke and ash can lead to significant disputes over claims. The representative emphasized the need for a universal understanding of what constitutes direct physical loss, as current outcomes vary widely depending on the insurance provider.

A key point raised was the variability in claims processing, with some homeowners receiving different outcomes based on their insurance company. The representative sought clarity from the FAIR Plan on how they assess direct physical loss due to smoke. The response indicated that the determination hinges on whether there is a physical change to the property or belongings, such as furniture or air conditioning units, due to smoke exposure. If items cannot be restored to their original condition, they may qualify for replacement under direct physical loss.

Following this, the committee shifted focus to the solvency of the FAIR Plan and strategies for depopulation. A member inquired about how other states manage depopulation of their insurance markets. The response outlined that many states have established residual markets with varying regulations that influence how policies are issued and renewed. The discussion underscored the importance of aligning California's strategies with those of other states to enhance the FAIR Plan's sustainability.

The committee also touched on the need for ongoing transparency and communication with the public, particularly in areas heavily impacted by wildfires. Members expressed appreciation for the efforts made by the FAIR Plan to improve transparency and engage with communities affected by fire damage.

In conclusion, the meeting underscored the urgent need for clearer definitions and processes regarding smoke claims and the importance of maintaining the solvency of the FAIR Plan. The committee plans to continue discussions on these topics, with a focus on developing effective strategies to support homeowners and ensure fair treatment in insurance claims.