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California Insurance Commissioner approves $1 billion FAIR Plan assessment in response to Southern California wildfires

2/21/25

By: Kristin Ingulsrud

The California FAIR Plan Association is a private association of all insurers licensed to conduct property or casualty business in California. The FAIR Plan was created by the California legislature to provide insurance to California residents who are unable to obtain private market coverage. The FAIR Plan, with the California Insurance Commissioner’s approval, may issue assessments to its member insurers if the FAIR Plan is threatened with insolvency. 

On February 11, 2025, the Commissioner approved the FAIR Plan’s request for a $1 billion assessment against its member insurers. The FAIR Plan’s request noted that as of February 9, 2025, the FAIR Plan had received approximately 3,469 claims for damages caused by the Palisades Fire and approximately 1,325 claims caused by the Eaton Fire. The FAIR Plan estimated the claims to exceed $4 billion. The Commissioner agreed that the $1 billion assessment was necessary to provide the FAIR Plan with sufficient funds to maintain operations and promptly pay claims.

The Commissioner urged California legislators to take action to improve the financial standing of the FAIR Plan and prevent this situation from recurring, including allowing the FAIR Plan to access credit lines and catastrophe bonds. 

The FAIR Plan has issued assessments in the past, including following the 1993 Kinneloa Fire in Altadena and the 1994 Northridge Earthquake. The Commissioner expects to file a report in the coming months regarding a financial examination of the FAIR Plan, including its compliance with the Insurance Department’s recommendations.

The FAIR Plan is authorized to calculate each member insurers’ assessment portion and will begin issuing notices to member insurers. Member insurers are directed to remit payment to the FAIR Plan within 30 days of the notice. 

For more information, please contact Kristin Ingulsrud at kristin.ingulsrud@fmglaw.com or your local FMG attorney.