Nearly six months after devastating wildfires swept through Los Angeles, lawmakers are working on legislation to stabilize the state’s insurance program for high-risk homes. Assembly Bill 226, sponsored by Assemblymembers Lisa Calderon (D-Whittier) and David A. Alvarez (D-San Diego), aims to protect the FAIR Plan, the state’s insurer of last resort, from financial collapse. The bill would allow the FAIR Plan to access loans and bonds from the California Infrastructure and Economic Development Bank to maintain its financial capacity after disasters.
The FAIR Plan Stabilization Act has already passed the Assembly with a unanimous 72-0 vote and is now under consideration in the Senate. According to Assemblymember Lisa Calderon, “AB 226 stabilizes the FAIR Plan by allowing bonds to spread costs over time, preventing sudden insurer assessments that could spike premiums or bankrupt small companies.” The bill has received broad support from consumer advocates, industry stakeholders, and Insurance Commissioner Ricardo Lara.
The FAIR Plan has become a crucial safety net for homeowners unable to secure insurance through traditional markets, especially after the recent wildfires. As reported by LegiScan, the insurance availability crisis in California has forced many consumers to rely on the FAIR Plan, which is now at risk of being unable to pay claims after major disasters.
Insurance Commissioner Ricardo Lara, the bill’s chief sponsor, emphasized the importance of a stable FAIR Plan to protect California policyholders. He stated, “AB 226 builds on the many actions I have taken to fix the FAIR Plan through increased oversight and financial planning.” The bill’s passage is seen as a critical step in ensuring the FAIR Plan remains a reliable safety net for Californians in times of need.
As AB 226 moves through the legislative process, it is expected to face further scrutiny and potential amendments. The bill’s supporters remain optimistic about its chances of becoming law, providing much-needed stability to the state’s insurance market in the wake of frequent natural disasters.
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