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New legislation introduced in California aims to reform the state's FAIR Plan, but not everybody is on board.
On Feb. 2, California Insurance Commissioner Ricardo Lara and Assemblymember Lisa Calderon announced the Make It FAIR Act (AB 1680). The bill would require the California FAIR Plan to make several operational and governance changes meant to improve customer service and claims handling as well as add more transparency to its internal processes.
"Californians need a reliable and dependable source of insurance in good times and bad times," Calderon said in a statement. "The California FAIR Plan is our property insurance safety net and we need this association to work for all Californians."
The legislation would require the FAIR Plan to:
- Introduce a more comprehensive homeowners plan. Currently, FAIR Plan policyholders have to buy an additional policy to cover water damage, liability if someone is injured on their property and other coverages that are typically standard.
- Create a formal capital and liquidity management plan to increase protection from major wildfires and storms.
- Adopt a climate risk assessment using standards from the National Association of Insurance Commissioners.
- Hire more staff to address claims and complaints faster.
- Adopt a three- to five-year strategic plan.
- Provide public access to meetings and documents from the plan's governing committee and subcommittees.
- Create an annual report providing governance updates, premium rate information, catastrophe response plans and more.
- Expedite the return of policyholders to the regular market by using clearinghouse programs created by the state legislature.
The proposed reforms are drawn from a recent Report of Examination from the California Department of Insurance that found systemic problems within the FAIR Plan.
According to the report, those issues have led to delays, denials and inconsistent claims decisions for policyholders, especially those impacted by the 2025 LA wildfires. The CDI has even taken formal legal action against the FAIR Plan for smoke damage claims denials, with the case set for hearings later this year.
"Since my first year in office, I've pushed the FAIR Plan to modernize, expand coverage, meet basic customer‑service standards and treat policyholders fairly — yet its governing board has resisted key reforms and continues to fight others in court," Lara said in a statement. "The Southern California wildfires and the smoke‑damage crisis didn't create these failures, they exposed them."
The American Property Casualty Insurance Association said it's against the proposed reforms.
"This legislation is a lose-lose for Californians," said Nicole Ganley, APCIA assistant vice president for public affairs, in a statement. "Mandates like these are the root cause of California's insurance crisis. Expanding coverage without sustainable pricing and adequate reserves ultimately reduces consumer choice and strains the entire market."
California should be focusing instead on sustainable reforms for the state's insurance market.
"The FAIR Plan was designed to serve as an insurer of last resort—not to replace a healthy private market or take on risks it was never built to support," she said.
Photo credit: Newport Coast Media/Adobe Stock
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