Insurance commissioner details strategy to stabilize market after Southern California wildfires; cites $12.1 billion in claims paid

Insurance Commissioner Ricardo Lara told the Assembly Committee on Insurance on March 10, 2025, that the California Department of Insurance has taken immediate steps to protect wildfire survivors and is moving to implement a broader Sustainable Insurance Strategy to stabilize the state’s property insurance market.

Lara described several short-term consumer protections issued after the Southern California wildfires: orders encouraging insurers and the FAIR Plan to provide advanced claim payments, a one‑year moratorium on residential policy cancellations and nonrenewals in affected areas the department identified as encompassing more than 104 ZIP codes (which the department said represent about 924,000 policies), and expanded consumer assistance such as weekend insurance support workshops. “Insurance is not, is not just a financial tool. It is really a lifeline,” Lara told the committee.

Lara said his department’s enforcement and consumer-service teams have assisted more than 7,000 wildfire survivors directly and that, as of March 10, insurers had paid more than $12.1 billion on wildfire claims. He also said more than 37,000 claims have been filed and over 27,000 of those claims have received partial payment. The department announced a consumer claims tracker to improve transparency on claim status and payouts.

To address longer-term market stability, Lara outlined five core components of the Sustainable Insurance Strategy (SIS): (1) permit the use of catastrophe modeling in rate filings for insurers that commit to grow coverage in designated wildfire-distress areas and depopulate the FAIR Plan, with a pre‑qualification review (PRID) to vet model integrity; (2) permit insurers to include California net reinsurance costs in rate filings when accompanied by commitments to write or expand policies in distressed areas; (3) reform and modernize the FAIR Plan, including authorizing assessments and other financial tools; (4) streamline and accelerate the state’s rate‑review processes and invest in department staffing and data tools; and (5) increase transparency and oversight for interveners in rate proceedings.

Lara said the department finalized a set of regulatory changes in late 2024 intended to enable the SIS — including catastrophe-modeling standards, a California net cost of reinsurance regulation, and a revised rate application process — and that a public wildfire catastrophe modeling group will issue recommendations soon. He described ongoing outreach to global reinsurers (including meetings at the Bermuda Risk Summit) and said reinsurance companies had agreed to expedite payments to wildfire survivors in line with the department’s directives.

On the FAIR Plan, Lara said he approved a request to assess member insurers for $1 billion to bolster the FAIR Plan’s ability to pay claims related to the Southern California wildfires and directed FAIR Plan management to use available funds, reserves and reinsurance and to hire staff needed to speed claims processing. He said his office is conducting a financial and operational examination of the FAIR Plan and is working with legislators on AB 2026 to broaden financial tools available to the plan (for example, catastrophe bonds or a line of credit).

Lara also told committee members the department had funded local law enforcement and prosecutors to combat fraud — including an insurance fraud strike team in partnership with the Los Angeles County district attorney — and told the committee the department had allocated funds to district attorney offices statewide, specifically citing $116 million to Los Angeles County.

Committee members asked about timing and near‑term expectations. Lara said he expects to begin seeing market stabilization and insurer expansions into distressed areas as SIS tools are implemented, and suggested 2026 as an initial timeline for measurable changes based on the schedule for model approvals and rate filings. Members pressed him about why regulatory changes were not completed earlier; Lara said legal and procedural safeguards under Proposition 103 shaped the timetable and that the department prioritized a defensible process to reduce the risk of successful legal challenges.

Several committee members and witnesses urged continued emphasis on mitigation and building‑code improvements to reduce long‑term risk. Industry witnesses generally expressed support for the goals of the SIS while urging patience on the pace of market recovery and technical accuracy in the regulations. The hearing record includes follow‑up questions from multiple members and indicates further oversight and coordination with the department will continue.