Assembly committee advances bill allowing FAIR Plan to seek I‑Bank bonds after disasters

The Assembly Insurance Committee voted to send AB 226 to the Appropriations Committee after members and a broad coalition of industry groups and the Department of Insurance said the bill would give the California FAIR Plan an additional tool to manage financial strain following catastrophic events.

AB 226 would authorize the Fair Access to Insurance Requirements plan (the FAIR Plan) to request that the California Infrastructure and Economic Development Bank (I‑Bank) issue bonds, loans or lines of credit—subject to approval by the insurance commissioner—so the FAIR Plan could access capital to help meet claims following a disaster and spread the cost of assessments imposed on insurers over a longer period.

The bill’s author, Assemblymember Alvarez, told the committee the measure is intended to protect consumers and “enhance the financial tools available to the crucial safety net” provided by the FAIR Plan. Andrew Deller, deputy legislative director at the California Department of Insurance, described the department as a cosponsor and said the authority would be exercised under the commissioner’s oversight to “ensure the FAIR Plan’s ability to continue operating and timely pay consumer claims.”

Dan Dunmayer, president and CEO of the California Building Industry Association, and several business, insurer and housing groups testified in support, saying a more stable FAIR Plan would help stabilize the broader homeowners insurance market. John Norwood of the Independent Insurance Agents and Brokers of California cited historical precedent for similar authority granted to the California Insurance Guarantee Association and urged support. Organizations recording support included the California Association of Realtors, California Farm Bureau, California Business Properties Association, the Personal Insurance Federation of California, Zurich Insurance, the San Diego Housing Commission, and the California FAIR Plan.

Will Abrams, a wildfire survivor, testified that the Legislature should “connect the dots” between utilities, reinsurance markets and consumer protections so that investor‑owned utilities have appropriate incentives when their equipment contributes to catastrophic fires. Assemblymember Addis raised similar concerns about utilities’ role but did not oppose the bill.

Assemblymember Harabedian made the motion to pass AB 226 to Appropriations; Assemblymember Addis seconded. On a roll call the committee recorded 13 ayes, 0 noes and the measure was ordered to Appropriations. Committee members who voted aye during the roll call included Calderon; Wallace; Addis; Alvarez; Avila Farias; Berman; Chen; Gibson; Harabedian; Krell; Macedo; Nguyen; and Valencia.

Committee witnesses and the Department of Insurance emphasized that the authority created by AB 226 would be an additional tool and would not itself raise insurance rates; the department said final use of bonds, loans or lines of credit would be subject to the commissioner’s approval. Supporters argued the tool would allow assessment costs that otherwise would be passed quickly to insurers—and ultimately to consumers—to be spread over time, reducing immediate upward pressure on premiums following major disasters.

The bill record included statements on localized impacts: Assemblymember Addis said Monterey County’s FAIR Plan enrollment rose about 300% from 2020 to 2024, Santa Cruz County about 530%, and San Luis Obispo County about 560% in the same period. Witnesses also referenced the recent Los Angeles fires and a roughly $1 billion set of assessments insurers faced after that event.

AB 226 will be considered next by the Appropriations Committee. The committee left the roll open briefly after the vote; subsequent clerical audio in the record noted the item was referred to Appropriations.