Golden State Today

California Insurance Commissioner Ricardo Lara announced reforms to the state's FAIR Plan, known as the "insurer of last resort," aiming to enhance affordability and reliability for those dependent on it. This initiative follows Governor Gavin Newsom's executive order calling for swift regulatory action to strengthen California’s insurance marketplace.

Governor Newsom emphasized the importance of these changes: “California’s all-of-the-above strategy is addressing this decades-old crisis to get people the reliable and affordable insurance they need. Strengthening the state’s FAIR Plan has been a key priority, and these upgrades will help stabilize the entire market while providing more stability for those who already depend on it.”

The modernization includes a new Plan of Operation within 30 days, featuring expanded coverage options such as a high-value commercial coverage limit up to $20 million per building, enhanced financial stability through a robust financial formula, and improved transparency with increased public reporting.

The FAIR Plan was established in 1968 to serve California homeowners unable to secure traditional insurance. It operates without public or taxpayer funding as a syndicated fire insurance pool comprising all insurers licensed for property/casualty business in California.

In September last year, Governor Newsom signed an executive order urging swift action from Commissioner Lara. The administration released a proposal in May to expedite rate change approvals while maintaining consumer protections under Proposition 103.

Insurance rates have risen nationwide due to climate impacts; however, California's rates remain below national averages. For homes valued at $300,000, average yearly costs are:

- California: $1,405

- National: $2,601

- Texas: $3,851

- Florida: $4,419