(Image Credit: IMAGN) Jan 16, 2025; Altadena, CA, USA; The remains of St. Mark?s Episcopal church and school in Altadena, California. Mandatory Credit: Megan Smith-USA TODAY
Altadena, California – The devastating fires that recently ravaged Los Angeles-area neighborhoods have intensified the spotlight on California’s escalating insurance crisis, prompting lawmakers to propose a series of unprecedented reforms.
The fires, which left communities like Altadena and Pacific Palisades in ruins, have exacerbated existing concerns about the availability and affordability of fire insurance in the state. Lawmakers are now pushing forward with bills aimed at addressing the financial stability of the FAIR Plan, the state’s insurer of last resort, and improving consumer protections.
FAIR Plan Under Scrutiny
A key proposal, Assembly Bill 234, would place the state’s top legislative leaders on the governing committee of the FAIR Plan, which recently requested a $1 billion bailout after incurring significant losses from the recent fires. The plan, designed to provide fire insurance to those unable to obtain it elsewhere, has seen a surge in customers as private insurers pull back from high-risk areas.
Assemblymember Lisa Calderon, who authored the bill, argues that increased transparency is crucial due to the plan’s growing financial vulnerability. If passed, California would be the first state to include lawmakers on a FAIR Plan board.
The FAIR Plan has faced criticism for its operational issues, including billing errors and slow customer service. Betty Ryder, a homeowner in Tujunga, experienced firsthand the plan’s administrative challenges when her policy was mistakenly canceled despite timely payments.
Other legislative efforts include:
Assembly Bill 226: This bill would allow the FAIR Plan to issue bonds through the California Infrastructure and Economic Development Bank, enabling it to spread out claims payments over time and ensuring financial stability after catastrophic events.
Senate Bill 495: This measure would make California the first state to require insurers to pay claims without requiring policyholders to submit itemized inventories. It also extends the time for policyholders to provide proof of loss.
Assembly Bill 1354: This bill proposes a five-year tax write-off for rising fire insurance premiums for eligible taxpayers.
Senate Bill 222: This bill would allow insurance companies and individuals to sue fossil-fuel companies for damages caused by climate-related disasters.
