California’s Insurance Crisis: Lara Pushes Sweeping FAIR Plan Reforms
Los Angeles,CA – June 28,2025 – California Insurance Commissioner Ricardo Lara is spearheading significant reforms to the state’s FAIR Plan,the insurer of last resort,as California grapples with a deepening insurance crisis fueled by escalating wildfire risk. The changes aim to stabilize a system buckling under increased demand and restore the FAIR Plan to its intended role as a temporary solution, not a permanent one.
The FAIR Plan has seen a dramatic surge in policies – a 139% increase as September 2021, reaching 573,739 as of March 2025 – driven by insurers withdrawing from high-risk areas prone to wildfires Proposition 103 allows insurers to bypass these areas, leaving homeowners and businesses reliant on the FAIR Plan.Key Reforms Taking Effect:
Expanded Coverage (July 26, 2025): The FAIR Plan will temporarily offer high-value commercial coverage – up to $20 million per building and $100 million per location – extending to HOAs and affordable housing through 2028.
Increased Clarity (July 1,2025): The FAIR Plan will be required to publicly report financial data,policy counts,and exposures.
Market Stabilization: Lara is actively working to stabilize the market and recently urged the dismissal of a lawsuit he believes hinders reform efforts.
Wildfire Claims Oversight: The Department of Insurance is scrutinizing the FAIR Plan’s handling of smoke damage claims from recent wildfires, demanding improvements in staffing and claims processing.
Operational Review: An upcoming financial examination report will assess progress on governance and service reforms based on 2022 recommendations. New Financial Tools: Assembly Bill 226, co-sponsored by Lara, will allow the FAIR Plan to explore bonds, loans, and credit lines to broaden access to fire insurance, pending the Commissioner’s approval.
“The FAIR Plan needs to be a temporary option, not the only option,” Lara stated, emphasizing his commitment to a competitive insurance market and ensuring adequate services and payouts for those currently relying on the FAIR Plan
