Ordering the insurance companies’ FAIR Plan to continue swiftly paying claims to Southern California wildfire survivors, Insurance Commissioner Ricardo Lara today took action to maintain its solid financial footing. The FAIR Plan, an insurance safety net that the state requires insurance companies to operate, requested the Commissioner’s approval for $1 billion in additional funds from its member companies and also released detailed data about its claims paid to wildfire survivors.

Commissioner Lara approved the FAIR Plan’s request – known as an “assessment” – for the funding necessary to continue meeting its obligations to Californians. The fee will be divided among insurers based on their market share. The $1 billion assessment is the largest since the FAIR Plan was created in 1968, and the first time since the 1994 Northridge earthquake. State regulations allow insurers to pass along as much as half the cost of the assessment to customers, in the form of higher charges. Insurers must absorb the other half.

Additional key actions include:

– – Directing the FAIR Plan to hire additional staff needed to process and pay claims fairly, fully, and quickly.
– – Requiring the FAIR Plan to utilize all available funds, including reserves and reinsurance funds.
– – Protecting consumers from bearing the full cost of an assessment, with insurance companies responsible for half the assessment under an agreement reached last year. Subject to the Commissioner’s prior approval under Proposition 103, insurance companies may issue a temporary supplemental fee as a percentage of the policy premium and cannot pass assessment costs on to consumers in future rates.
– – Maintaining a healthy FAIR Plan reserve fund for future claims as the summer wildfire season approaches.
– – Requiring the FAIR Plan to comply with all laws applicable to other insurance companies, including advance payments for living expenses and personal property without the need for an inventory.

Commissioner Lara claims he finalized the Sustainable Insurance Strategy in 2024 – the largest insurance reform in 30 years – aimed at increasing the issuance of regular insurance policies in higher-risk areas and reducing reliance on the FAIR Plan.

Further underscoring the need for this reform, the most recent FAIR Plan assessments followed the 1993 Kinneloa Fire in Altadena and the Old Topanga Fire in Malibu and Topanga, which affected some of the same areas as the 2025 fires – claiming three lives and destroying nearly 550 structures in those devastating incidents. Previous insurance commissioners approved $260 million, or approximately $563 million in today’s dollars, in assessments for those fires and for the fires following the 1994 Northridge Earthquake.

Commissioner Lara expects to file the Department’s Report of Examination for an ongoing financial examination of the FAIR Plan, including its compliance with recommendations from the Department’s 2022 Operational Assessment Report in coming months. The report called for significant changes in the FAIR Plan’s governance, operations, underwriting and claims handling, risk management, customer service, and financial planning strategies and policies.

Using FAIR Plan data from the Property Insurance Plans Service Office (PIPSO), the AM Best Commentary titled, “California Wildfires: Multiple Credit Negative Impacts for Insurers,” reveals that the number of California FAIR Plan policies rose by 276 percent from 2018 through 2024 (based on fiscal years ending September 30). And the premium attributable to these policies jumped to $1.4 billion in 2024, up more than 15-times higher than the $87.2 million recorded for the California FAIR plan in 2018.