Gov. Gavin Newsom signed a bipartisan package of bills last week aimed at improving California’s insurer of last resort for fires, the California FAIR Plan, following a reported $4 billion loss.
That loss, officials say, is primarily due to the devastating fires that broke out in Los Angeles County earlier this year.
Newsom’s office says the legislation is designed to stabilize the state’s home insurance market and protect residents from climate-driven disasters.
The new laws provide the FAIR Plan with stronger financing mechanisms to pay claims faster, improve oversight, enhance the policyholder experience, add coverage for manufactured homes, and require the California Department of Insurance to review home hardening measures every five years as part of wildfire resilience efforts.
“These crucial reforms to the FAIR Plan mark a significant step forward in protecting consumers, stabilizing the market, and enhancing transparency,” said Insurance Commissioner Ricardo Lara in a statement on Oct. 9.
“As we tackle availability concerns and ensure that insurance companies provide consumers with policies in the traditional market, the FAIR Plan must offer essential support to its customers,” he continued. “I am grateful to Governor Newsom for his continued leadership and to the legislators who have worked on these vital issues, which will greatly benefit communities most at risk of wildfires.”
The bills signed in the package are:
-AB 1 by Assemblymember Damon Connolly (D-San Rafael), addressing residential property insurance and wildfire risk
-AB 226 by Assemblymember Lisa Calderon (D-Whittier), strengthening the FAIR Plan Association
-AB 234 by Assemblymember Lisa Calderon (D-Whittier), improving the FAIR Plan governing committee
-AB 290 by Assemblymember Rebecca Bauer-Kahan (D-Orinda), enabling automatic payments
-SB 525 by Sen. Brian Jones (R-San Diego), expanding coverage to manufactured homes
Newsom noted that the legislation builds on prior efforts, including a 2023 executive order directing swift action to stabilize the insurance market, expand coverage, and maintain strong consumer protections.
Despite rising rates due to climate risks, California’s insurance premiums remain among the lowest in the nation, he assured.
“The kinds of climate-fueled firestorms we saw in January will only continue to worsen,” Newsom said. “That’s why we’re taking action now to strengthen California’s insurance market and make it more resilient in the face of the climate crisis.”
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Article By: Bo Tefu, California Black Media
