Gov. Gavin Newsom signs bills to strengthen oversight of California's insurer of last resort

Laurence Darmiento, Los Angeles Times on Oct 9, 2025

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Gov. Gavin Newsom signed legislation Thursday intended to bolster California's property insurer of last resort, which was hit hard by January's wildfires.

The package of bills attempts to ease the California FAIR Plan's financial woes while also giving lawmakers more oversight over the carrier, which is operated by the state's licensed home insurers and offers coverage to property owners who can't get or afford it elsewhere.

"The kinds of climate-fueled firestorms like we saw in January will only continue to worsen over time. That's why we're taking action now to continue strengthening California's insurance market to be more resilient in the face of the climate crisis," Newsom said in a news release.

The FAIR Plan suffered an estimated $4 billion in losses, largely due to the Palisades and Eaton fires, after its rolls grew over the last several years as insurers withdrew from California's home insurance market.

The losses forced the plan to assess its member carriers $1 billion to pay its claims, half of which could be recouped from the carriers' own customers across the state. It recently filed for a 36% rate increase.

The FAIR Plan also has been sued by victims of the Jan. 7 fires over its rejection of smoke damage claims, which prompted Newsom last month to demand the insurer handle such claims "expeditiously and fairly."

In response to such outsize losses, Newsom signed Assembly Bill 226, which will enable the California Infrastructure and Economic Development Bank to issue bonds on behalf of the plan to pay for catastrophic claims.

Co-authored by Assemblymember Lisa Calderon, D-Whittier, chair of the Assembly insurance committee, and sponsored by Insurance Commissioner Ricardo Lara, the bill also will allow the plan to enter into lines of credit with institutional lenders.

The January fires also highlighted a long-standing issue critics have had with the plan — that it has historically been stingy with its financial disclosures. After the blazes, there was a paucity of information about its losses and whether it could cover them.

Assembly Bill 234, also coauthored by Calderon, requires the Speaker of the Assembly and the chairperson of the Senate Rules Committee, or their designees, to serve as nonvoting members of the plan's governing committee, which is dominated by the insurance carriers who operate and financially back it.

"These crucial reforms to the FAIR Plan mark a significant step forward in protecting consumers, stabilizing the market, and enhancing transparency," Lara said a statement.

The governor signed two other FAIR Plan bills on Thursday. Senate Bill 525 by Sen. Brian W. Jones, R-Santee, the Senate minority leader, requires the plan to offer insurance for manufactured homes that is comparable with what it offers to other residential properties.

Assembly Bill 290 by Assemblymember Rebecca Bauer-Kahan, D-Orinda, is a modernization bill that requires the FAIR Plan to establish an automatic payment plan for its customers.

The FAIR Plan issued a statement Thursday that it supported AB 226, the bond measure bill, and would work to implement the other legislation as required by law.

Another insurance bill signed by the governor, Assembly Bill 1, by Assemblymember Damon Connolly, D-San Rafael, requires the insurance department to ensure that its Safer from Wildfires program includes the most up-to-date fire-risk reduction measures.

Insurers writing property coverage in California are required to discount premiums to account for steps taken by individual homeowners, businesses and communities that lessen wildfire risks.

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