Insurance commissioner outlines sustainable-insurance strategy, details wildfire response and market reforms

Insurance Commissioner Ricardo Lara told the Assembly Committee on Insurance that the California Department of Insurance is pursuing a multi-pronged “sustainable insurance strategy” to stabilize the state market after a string of climate-driven disasters and, most recently, Southern California wildfires.

Lara described a series of immediate and longer-term actions his department has taken or proposed: ordering insurers to provide advanced payments on claims and additional living expenses, instituting a one-year moratorium on residential property nonrenewals for more than 104 ZIP codes encompassing roughly 924,000 policies in affected areas, approving a $1 billion Fair Plan assessment to keep the plan solvent, launching a consumer claims tracker and directing more enforcement against fraud and unlicensed adjusters and contractors.

“We have acted more swiftly than ever to assist consumers and communities,” Lara told the committee. He said the department had helped more than 7,000 wildfire survivors directly, opened consumer support workshops, and that insurers had paid more than $12.1 billion on wildfire-related claims to date. The department also reported more than 37,000 claims filed, with over 27,000 having received partial payments.

Longer-term reforms Lara described include new regulations to allow approved catastrophe models and to permit insurers that commit to expanding coverage in designated wildfire-distress areas to include reinsurance costs in rate filings. He said the department finalized a slate of reforms by Dec. 31, 2024 — including a catastrophe-modeling regulation, a California-only net cost of reinsurance rule and a retooled rate-application process — and is implementing them this year. Lara described the department’s California-focused review process for catastrophe models and a planned public wildfire catastrophe-modeling group chaired by a Cal Poly Humboldt dean.

Lara urged the committee to support mitigation investments and cross-agency work on building codes and land use. He described bills he is sponsoring or supporting that would further the strategy — including proposals to require fuller contents payments without detailed inventories (a so-called “eliminate the list” act), extend moratoria to commercial properties, modernize the Fair Plan’s governance and allow the Fair Plan to use financing tools, and create grants to help homeowners harden properties.

Committee members pressed Lara on timing and outcomes. Several members praised the department’s outreach but said reforms felt overdue given prior catastrophic fires. Assemblymember Gallagher noted Fair Plan exposure has risen rapidly and asked why regulatory action took so long; Lara said he prioritized building defenses that could be sustained through legal review and that he engaged reinsurers and the global market directly to win commitments. Members also asked about large pending rate filings, including State Farm’s request; Lara said the department is pushing for data, parent-company commitments and, where needed, administrative hearings.

Lara described other measures his office has taken to protect policyholders, including directing insurers to continue providing additional living expenses until homes are deemed habitable (subject to policy limits and public-health guidance), coordinating an insurance fraud strike team with the Los Angeles County district attorney, and ordering health insurers to submit emergency plans to protect access to medication and care.

What’s next: Lara said the department expects to complete model reviews and other regulatory steps by mid-2025, roll out a data-reconciliation tool and better staffing for rate reviews, and hold public rulemaking on intervener transparency this summer. He told the committee the strategy’s implementation should start producing measurable market improvements in 2026, while noting that new catastrophes or seismic risks could change the outlook.

Why it matters: The strategy seeks to reduce reliance on the California Fair Plan — the insurer of last resort — by getting private carriers to write more policies in distressed areas, depopulate the Fair Plan and restore competition in hard-hit ZIP codes. Committee members and industry witnesses uniformly described the challenge as urgent and complex; industry groups said they support the overall approach while urging realistic timetables for market recovery.