A bill to initiate reforms to the California FAIR Plan that include changes to customer service and claims, and added transparency was introduced on Monday.
Assembly Bill 1680, the Make It FAIR Act, authored by Assemblymember Lisa Calderon and sponsored by California Insurance Commissioner Ricardo Lara, is designed to strengthen claims handling, expand coverage options, and improve transparency for wildfire survivors.
Related: California Bill Would Require Insurer Claims Handling Plans, and Double Penalties
The act enacts reforms identified in the California Department of Insurance’s recent Report of Examination, which found the FAIR Plan had failed to comply with 17 recommendations related to financial condition, corporate governance, and consumer protections.
The examination reportedly revealed systemic problems that left wildfire survivors struggling with delays, denials, and inconsistent claims decisions, particularly after the 2025 Los Angeles wildfires, according to the CDI.
Insurance claims paid from Los Angeles wildfires is $22.4 billion, yet the department has taken formal legal action against the FAIR Plan for denying hundreds of smoke damage claims, and despite Lara’s efforts to improve the FAIR Plan’s performance and accountability, wildfire survivors have continued to report ongoing problems accessing benefits, with delays, denials, and miscommunication at the top of the list of consumer complaints filed with the CDI since the L.A. wildfires.
Related: The Return Period for An LA Wildfire-Scale Event May Be Shorter Than You Think
The American Property Casualty Insurance Association called the bill “a lose-lose for Californians.”
“Mandates like these are the root cause of California’s insurance crisis,” stated Nicole Ganley, APCIA assistant vice president for public affairs. “Expanding coverage without sustainable pricing and adequate reserves ultimately reduces consumer choice and strains the entire market. It is bad for FAIR Plan policyholders because it expands coverage through a plan that lacks the financial capacity to absorb the next major catastrophe. And it’s bad for all other Californians, who will inevitably be forced—yet again—to absorb the cost of future FAIR Plan shortfalls after the next major event.”
AB 1680 would require the FAIR Plan to make significant operational and governance changes to meet Californians’ needs, while market improvements take hold, such as:
- Implementing a more comprehensive homeowners coverage option like other insurance companies. FAIR Plan residential policyholders must buy a separate insurance policy to have coverage for water damage, liability if someone is injured on their property, and other standard coverages.
- Hiring more staff to manage its increasing operational needs.
- Expediting policyholders in returning to the regular market by improving clearinghouse programs created by the state Legislature.
- Adopting a three-to-five-year strategic plan to anticipate changes in the market, improve policy handling and assist people in leaving the FAIR Plan.
- Improving transparency by providing public access to meetings and documents of the FAIR Plan’s Governing Committee and Subcommittees.
- Adopt a formal climate risk assessment, while reporting climate-related financial risks.
- Creating a formal capital and liquidity management to protect from unexpected events such as major wildfires or storms.
Topics California