California Fair Plan leaders describe $1 billion assessment, near-$600 billion exposure after January wildfires

The California FAIR Plan’s president told the Assembly Insurance Committee that the FAIR Plan and its member companies moved this year to a $1 billion assessment after January wildfires and that the residual insurer now carries about 575,000 policies and roughly $599 billion in total insured exposure.

“By statute, we are the insurer of last resort,” Victoria Roach, president of the California FAIR Plan, told the committee. She and FAIR Plan staff described the association’s role, its recent growth and why it requested the assessment that was billed to member insurers earlier this year.

Why it matters: The FAIR Plan was created by the Legislature in 1968 to provide insurance when the admitted market is unavailable. Committee members heard that the FAIR Plan’s rapid growth — and concentration of risk in recent wildfires — raises the prospect of further assessments on insurers, a potential cost passed to the market and a gauge of the private market’s health.

Fair Plan role and recent growth

Roach said the FAIR Plan is a not-for-profit, privately run residual market — “we are not a state agency. We’re not state funded, and we’re not taxpayer funded.” She told lawmakers the plan’s purpose is to provide temporary coverage until consumers can find coverage in the admitted (private) market, but that the plan is increasingly becoming the primary carrier for many Californians rather than the insurer of last resort.

Roach and FAIR Plan staff reported the association’s policy count has risen sharply since 2018 and that exposure grew “exponentially” after major wildfire seasons. In 2023 the FAIR Plan’s policy count rose roughly 40% year over year and exposure rose…