{"id":22216,"date":"2024-07-26T18:32:16","date_gmt":"2024-07-26T18:32:16","guid":{"rendered":"https:\/\/www.insurancejournal.com\/?p=785844"},"modified":"2024-07-26T18:32:16","modified_gmt":"2024-07-26T18:32:16","slug":"california-commissioner-announces-fair-plan-modernization-deal","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2024\/07\/26\/california-commissioner-announces-fair-plan-modernization-deal\/","title":{"rendered":"California Commissioner Announces FAIR Plan Modernization Deal"},"content":{"rendered":"<div><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/img\/social\/opengraph\/ij-social-default-1200x630.png\" class=\"ff-og-image-inserted\"><\/div>\n<ul class=\"nav nav-tabs tabs tabs-entry\">\n<li class=\"active\"><a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2024\/07\/26\/785844.htm\">Article<\/a><\/li>\n<li><a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2024\/07\/26\/785844.htm?comments\" rel=\"nofollow\">0 Comments<\/a><\/li>\n<\/ul>\n<div class=\"article-content clearfix\">\n<p>California Insurance Commissioner Ricardo Lara said on Friday that he and the California Fair Plan have agreed to establishing a new high value commercial coverage option with limits up to $20 million per building and other steps that he said will modernize the state\u2019s \u201cinsurer of last resort.\u201d<\/p>\n<p>The changes are part of Lara\u2019s so-called Sustainable Insurance Strategy intended to stabilize the California homeowners insurance market and address the insurance crisis.<\/p>\n<div class=\"bzn bzn-sized bzn-intext\">\n<ins data-revive-zoneid=\"79\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>Carriers are pulling back from the state\u2019s homeowners market, blaming blamed wildfire losses as well as regulations.<\/p>\n<p>State Farm has applied for large rate increases in California, a year after the carrier got rate approvals of 7% and 20%. The insurer, the largest in California, insures nearly one-in-five homes in the state. It recently requested <a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2024\/07\/03\/782454.htm\">a 30% rate increase for its homeowners line<\/a>, a 52% rate increase for renters and 36% rate increase for condo coverage.<\/p>\n<p><strong>Related: <a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2024\/07\/26\/785773.htm\">California Wildfire Continues to Spread Rapidly to 164K Acres<\/a><\/strong><\/p>\n<p>Allstate, which stopped issuing new California homeowners insurance policies in 2022, is <a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2024\/07\/12\/783705.htm\">seeking an increase in its California homeowners insurance premiums<\/a> by an average of 34%. It would be the largest rate increase this year and would impact more than 350,000 policyholders.<\/p>\n<p>Those are two among several carriers that have pulled back writing homeowners in California.<\/p>\n<p>This has driven buyers into the state\u2019s FAIR Plan, a limited and expensive last resort. Brokers are also taking clients to the surplus lines market, where more buyers are now getting coverage. With the year only half over, <a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2024\/07\/23\/785223.htm\">homeowners insurance transactions in California\u2019s surplus lines are up 70% for 2024<\/a>, doubling the total 10 years ago. That follows a massive increase in homeowners surplus lines transactions last year.<\/p>\n<div class=\"bzn bzn-sized bzn-intext-2\">\n<ins data-revive-zoneid=\"162\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>\u201cModernizing the FAIR Plan is a crucial step in our strategy to stabilize California\u2019s insurance market,\u201d Lara said in a statement. \u201cIt\u2019s critical for Californians to understand that a growing FAIR Plan contributes to our insurance crisis. By strengthening the FAIR Plan while providing financial stability and solvency protections, we are creating long-term security for consumers, homeowners, and businesses across the state that is long overdue.\u201d<\/p>\n<p><strong>Related: <a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2024\/07\/25\/785409.htm\">California Homeowners Sue FAIR Plan Over Smoke Damage Coverage<\/a><\/strong><\/p>\n<p>Lara\u2019s agreement with the FAIR Plan is targeted at homeowners and condo associations that need expanded coverage, as well as farms, builders, and businesses with multiple buildings in the same location.<\/p>\n<p>Specifically, the FAIR Plan has agreed in a binding legal stipulation to issue a new plan of operation within 30 days that will implement Commissioner Lara\u2019s plan to offer homeowners, consumers, and business owners:<\/p>\n<ul>\n<li>Establishing a new \u201chigh-value\u201d commercial coverage option with limits up to $20 million per building, along with past increases for residential policies.<\/li>\n<li>Creating a sound financial formula to protect policyholders in extreme loss scenarios.<\/li>\n<li>Requiring increased public reporting on FAIR Plan activity and customer service metrics.<\/li>\n<\/ul>\n<p>The American Property Casualty Insurance Association called the action \u201can important step toward restoring the FAIR Plan\u2019s financial stability and ensuring consumers have access to the coverage they need.\u201d<\/p>\n<p>\u201cWhile some details still need to be finalized, we appreciate the Department\u2019s commitment to implementing reforms that will bring balance back to the insurance market and increase access to coverage for all Californians,\u201d reads a statement from the APCIA.<\/p>\n<p>Consumer Watchdog called Lara\u2019s proposal \u201ca multi-billion dollar policyholder bailout of the insurance industry for its exposure to wildfire losses at the FAIR Plan.\u201d<\/p>\n<p>He group states that as a result of the changes, all California property insurance policyholders would be required to pay with an added surcharge on their insurance bills.<\/p>\n<p>\u201cIt\u2019s outrageous and outside the law for the insurance commissioner to force consumers to bail out home insurance companies and then call that consumer protection,\u201d Carmen Balber executive director of Consumer Watchdog, said in a statement. \u201cIf the FAIR Plan gets into trouble it will be because insurance companies dumped too many Californians onto its books. Those companies should be on the hook for the fallout, not every homeowner in the state.\u201d<\/p>\n<p class=\"tagtag\"> <span class=\"tagtag\">Topics<\/span> <a href=\"https:\/\/www.insurancejournal.com\/location\/california\/\" class=\"btn btn-sm btn-primary tagtag\">California<\/a> <\/p>\n<\/p><\/div>\n<div class=\"article-poll\" data-post=\"785844\">\n<div class=\"article-poll-vote\">\n<p>Was this article valuable?<\/p>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-no\">\n<form class=\"feedback-form\">\n<p>Thank you! Please tell us what we can do to improve this article.<\/p>\n<p> <textarea placeholder=\"Enter your feedback...\"><\/textarea> <button type=\"submit\" class=\"submit\" disabled>Submit<\/button> <button class=\"cancel\">No Thanks<\/button> <\/form>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-yes\">\n<form class=\"feedback-form\">\n<p>Thank you! <span class=\"percent\"><\/span>% of people found this article valuable. 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