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Committee advances AB 226 to let FAIR Plan access bonds, loans amid insurance market strain
Summary
AB 226, presented by Assemblymember Alvarez for Senator Calderon, would authorize the FAIR Access to Insurance Requirements (FAIR) Plan to obtain financing through bonds, loans or other agreements to pay claims and build reserves; the committee advanced the bill to the Senate Insurance Committee.
Assemblymember Jesse Alvarez presented AB 226 to the Senate Business, Professions and Economic Development Committee on June 9, saying the bill would authorize the California FAIR Plan to obtain financing through bonds or other agreements to pay claims after catastrophic events and to build cash reserves.
Alvarez said escalating wildfire and other disaster losses have strained the private insurance market and increased reliance on the FAIR Plan. “This will allow the FAIR Plan to better manage large scale losses,” he told the committee, adding the plan cannot repay financing on its own and would recover costs through assessments on member insurers.
Steve Cruz of the California Building Industry Association testified in support, saying AB 226 would help stabilize the homeowners and condominium insurance market, allow projects to move forward and protect consumer access to coverage. Josephine Figueroa, deputy commissioner and legislative director for the Department of Insurance, testified that Commissioner Ricardo Lara’s office cosponsors the measure and that the bill aligns with the FAIR Plan modernization and a sustainable insurance strategy.
Support came from county boards of supervisors, insurers’ trade groups and housing advocates. No organized opposition appeared at the hearing.
Senator Strickland moved the bill and the committee called the roll. The clerk recorded that AB 226 had the requisite votes and the committee advanced the bill to the Senate Insurance Committee; the day’s tally recorded eight supporting votes on the floor roll call.
The bill would give the FAIR Plan an additional tool — access to capital markets or credit facilities — to meet claim obligations during and after catastrophic loss events, with repayment to be recovered through assessments on member insurance companies as required by law.
