Insurance commissioner details rollout of Sustainable Insurance Strategy, opens investigations and task force

Insurance Commissioner Ricardo Lara told the California State Assembly Insurance Committee that his department has moved into the implementation phase of its Sustainable Insurance Strategy and has begun a series of regulatory and investigative actions intended to increase insurance availability and accountability across wildfire-impacted areas of the state.

Lara, testifying before the committee, said the Department of Insurance has approved new processes and tools to speed rate filings and to reward mitigation, announced a formal market-conduct examination of State Farm’s handling of wildfire claims, formed a smoke-claims remediation task force and is revising the intervener compensation process established under Proposition 103.

The new procedures are intended to address both availability and affordability, Lara said. “You can’t afford what doesn’t exist,” he said, arguing that rebuilding a sustainable market requires insurers to return to writing policies in wildfire-distressed areas and for regulators to evaluate filings more quickly. He told the committee the department has reduced average homeowner rate‑filing review time from 281 days to 71 days and has posted related data on the department website.

Why it matters: California’s homeowners and commercial insurance market has contracted in many high‑risk areas after recent wildfires, producing a heavy reliance on the FAIR Plan as the insurer of last resort. Lara and industry and trade witnesses told the committee that increasing insurer participation, improving the FAIR Plan’s solvency and clarifying standards for smoke remediation are necessary steps to restore the admitted market and protect consumers.

Key actions announced or under way

- Market-conduct examination of State Farm: Lara said the department opened a formal investigation into State Farm’s handling of claims from the Palisades and Eaton wildfires to review adjuster practices, claim reassignments and recordkeeping. He said the examination will assess whether State Farm complied with California consumer-protection and claim-handling laws and that the department waited until claims had matured enough to provide meaningful evidence. Lara described the examination as “a thorough fact-based review” that typically takes several months.

- Smoke-claims and remediation task force: Lara announced formation of a task force that includes consumer advocates, state and local public‑health experts, fire-safety specialists, smoke-remediation experts and insurance representatives to recommend remediation standards and identify responsible agencies. “This is not an insurance issue. This is a health and safety issue first and foremost,” he said, adding the task force should deliver recommendations in a matter of months.

- Intervener compensation and process reforms: Referring to Proposition 103’s intervener provisions, Lara said the Department will stop granting intervener petitions that raise issues unrelated to a given rate application and will require interveners to demonstrate a substantial contribution before awarding compensation. He also said he reassumed authority over outstanding intervener compensation petitions in December 2024 and expects to resolve all outstanding petitions by the end of the month.

- FAIR Plan transparency and oversight: Lara said he used executive authority to require greater FAIR Plan disclosure, including public policy counts and financial-condition information, and signaled the department may pursue additional legislative or regulatory reforms (he referenced support for AB 226 to expand FAIR Plan financial tools). Lara said his office will publicly track FAIR Plan size and policy counts to measure whether insurers are returning to private-market coverage in particular ZIP codes.

- Catastrophe models and rate-filing readiness: Lara said the department is finalizing review of multiple wildfire catastrophe models and has completed filing instructions for insurers to include net reinsurance costs in rate applications. He told members he expects insurers to file SIS (Sustainable Insurance Strategy) rate filings in the coming weeks and said the department has shortened its review time and added staff and outside consultants to handle filings.

Data and consumer relief cited by the department

Lara provided several figures the department has posted or compiled: more than 12,000 survivors helped with wildfire insurance questions; insurers have reported more than 38,000 claims with more than 35,000 fully or partially paid, totaling about $17,000,000,000 in payments; roughly 1,000 complaints on the fires have been filed directly with the department; and the department has recovered about $60,000,000 for Southern California wildfire survivors on those complaints.

Public and industry responses

Industry trade witnesses and business groups told the committee they support the SIS implementation and welcomed steps to speed filings and increase transparency. Representatives who gave public comment included Sarah and Taylor for the Personal Insurance Federation of California; Denny Reuter for the American Property Casualty Insurance Association; Dan Dunoyer, president and CEO of the California Building Industry Association; and John Norwood for the Independent Insurance Agents and Brokers of California. They stressed two measures for SIS success: timely rate-filing review and a financially sound FAIR Plan that does not underprice risk relative to the admitted market.

What the department asked of the Legislature

Lara asked the Legislature for continued budget and statutory support for the department’s contracts and staffing, for AB 226 (to give the FAIR Plan broader access to credit and financial tools) and for a broader set of legislative options if regulatory reforms prove insufficient to restore market participation.

Limits and next steps

Lara and members repeatedly acknowledged legal and practical constraints: he said some reforms will face litigation or interventional challenges, and that some outcomes depend on insurer willingness to file new rate applications. He urged consumers with unresolved claim issues to file complaints with the Department of Insurance so staff can compile evidence for investigations.

The committee concluded with the department’s pledge to post more real-time data on rate filings, FAIR Plan condition and intervener compensation, and with Lara’s statement that the department expects to complete catastrophe-model approvals and be fully able to accept SIS filings by the end of the month.