California Insurance Commissioner Ricardo Lara has introduced a wide-ranging reform package aimed at modernizing and restoring the intended function of the state’s Fair Access to Insurance Requirements (FAIR) Plan.
California Insurance Commissioner Ricardo Lara has introduced a wide-ranging reform package aimed at modernizing and restoring the intended function of the state’s Fair Access to Insurance Requirements (FAIR) Plan. The initiative targets what the Commissioner refers to as “decades of neglect” and is designed to address longstanding issues in the state’s insurance safety net.
Background: FAIR Plan's Expanding Role
Established as an insurer of last resort, the FAIR Plan was originally designed to offer temporary coverage when traditional insurance was unavailable. However, in recent years, it has grown significantly, particularly following catastrophic wildfire events. Proposition 103 allows insurance carriers to bypass high-risk areas, which has contributed to more homeowners and businesses turning to the FAIR Plan for coverage.
According to the California Department of Insurance, the FAIR Plan held more than 140,000 policies in 2015 and has since expanded. As of 2023, it represents approximately 4% of the state’s residential market.
Highlights of the Reform Package
Expanded Coverage for High-Value Properties
Starting July 26, 2025, the FAIR Plan will temporarily offer expanded coverage for high-value commercial properties, homeowners associations, and affordable housing developments. The new option will cover buildings with limits up to $20 million each, with a cap of $100 million per location. This expansion is set to expire in 2028.
Increased Transparency Measures
Effective July 1, 2025, the FAIR Plan will be required to publicly disclose total exposures, policy counts, financial data, and other operational information on its website and to state policymakers.
Market Stability Efforts
The Department of Insurance has taken steps in 2024 to stabilize the insurance market following withdrawals by insurers concerned about the FAIR Plan’s growing costs. On June 23, 2025, the Department asked a judge to dismiss a lawsuit by Consumer Watchdog that challenges two regulatory bulletins related to temporary supplemental fees. The Department asserts the lawsuit undermines efforts to improve insurance access.
Wildfire Claims Oversight
The Department is currently investigating the FAIR Plan’s handling of smoke damage claims from Los Angeles wildfires. The goal is to address consumer complaints and ensure timely, full claim payouts. Commissioner Lara has called on the FAIR Plan to increase staffing, enhance claims processing, and reduce costs borne by consumers.
Operational Accountability
The Department is preparing to release a Report of Examination, following up on a 2022 Operational Assessment. The earlier report recommended improvements across governance, underwriting, claims handling, risk management, customer service, and financial planning.
Fiscal Tools for Expanded Access
Assembly Bill 226, co-sponsored by Commissioner Lara and authored by Assembly Members Lisa Calderon and David Alvarez, would allow the FAIR Plan to utilize financing options such as bonds and loans—subject to prior approval from the Insurance Commissioner—to improve fire insurance accessibility.
Looking Ahead
Commissioner Lara has reiterated his goal to return the FAIR Plan to its original role as a temporary solution, emphasizing the need for a competitive insurance market where Californians have access to standard policies. The reforms are part of a broader Sustainable Insurance Strategy to enhance availability and transparency across the state’s insurance framework.