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Foster-family agencies report insurer nonrenewals and skyrocketing premiums; lawmakers seek bridge funding and options
Summary
CDSS reported nine foster-family agency closures as of April 1; agency witnesses said liability premiums have quadrupled in some cases and asked the Legislature to consider a $47 million bridge fund while long-term solutions are developed with insurance regulators and stakeholders.
The committee heard testimony about a statewide insurance crisis affecting foster-family agencies (FFAs) that has led to closures and poses wider capacity risks for foster placements.
Jennifer Troia of CDSS told the panel that as of April 1 nine FFAs had closed; seven closed prior to March 2025 and those seven involved 49 resource families who ported approvals and 61 children. CDSS said it has required 60-day closure notices and has been coordinating expedited porting and technical assistance to prevent placement disruptions. Troia emphasized the department's ongoing concern that many more FFAs are under pressure from sharply higher liability premiums.
Representatives of nonprofit providers and alliance groups described dramatic premium increases. Brittany Lucas, CFO of Redwood Community Services, said her agency's liability premium rose from $215,000 to $863,000 (a 401% increase) after nonrenewal by a prior insurer, creating a near-fatal fiscal shock. Lucas and other witnesses asked the Legislature to support a two-year bridge fund of $47 million to keep existing FFAs solvent while CDSS, the Department of Insurance and stakeholders pursue longer-term solutions (risk pools, reinsurance conversations and policy options).
CDSS said it is convening insurers, reinsurance markets, counties, provider associations, consumer attorneys and other stakeholders; the Department of Insurance is engaged, and CDSS planned a larger meeting with the reinsurance market during the legislative reporting period. CDSS said it would report options and outcomes to the Legislature by the May revision consistent with AB 2496, which the CDSS referenced as directing additional departmental work, and that the department will coordinate further information with the Legislature.
Why this matters: FFAs serve thousands of children statewide and are a key part of efforts to expand community-based placements under the tiered rate structure. Large, sudden premium increases risk provider exits, placement reductions and service gaps for children in foster care.
Legislative reaction and next steps: Several senators urged CDSS and the Department of Finance to include bridge funding considerations in the May revision. CDSS and stakeholders agreed to continue seeking short-term mitigations (expedited porting, information sharing on insurers, technical assistance) while exploring risk-pooling, insurance-market engagement and potential legislative funding. Provider witnesses urged a near-term appropriation to avert further closures during the multi-year rollout of the tiered rate structure.
