California Fair Plan says $1 billion assessment, $2.9 billion paid so far after Jan. 7 wildfires; policy count and exposure surge

The California Fair Plan told the Assembly Insurance Committee on Oct. 29, 2025, that it requested a $1 billion assessment on its member insurers after the Jan. 7 wildfires and has paid about $2.9 billion in claims to date, with an estimated $4 billion in total losses once claims are complete.

Victoria Roach, president of the California Fair Plan, said the plan has grown rapidly: "We are now at about $599,000,000,000. We're closing in on $600,000,000,000 as of March 31," referring to insured exposure, and that policy count has climbed to roughly 575,000 policies. Armand Feliciano, speaking for the FAIR Plan, described the board and accounting-committee process that led to the assessment and said the board "unanimously agreed we needed to assess. They agreed a billion dollars was the right number."

The committee was told why the Fair Plan — created by the Legislature in 1968 as an insurer of last resort — has become a first stop for many Californians. Roach said the voluntary (admitted) market and surplus lines carriers are not offering sufficient capacity across the state, so consumers are "coming to us first" for reasons of price and availability. "Sometimes they're coming to us because of price, and sometimes they're coming to us more often because they just can't get insurance anywhere else," she said.

Why it matters: the Fair Plan is a residual market intended as a temporary safety net until policyholders can return to the admitted market. Large, sustained growth and concentrated wildfire exposure increase the risk the plan will need industry assessments to cover large loss events or be unable to pay claims promptly.

Assessment and reinsurance: Fair Plan officials described the statutory assessment mechanism and the way reinsurance works with the organization’s new reinsurance tower. Feliciano said the Fair Plan’s new reinsurance program leaves the organization responsible for the first $1.25 billion of loss for a single event. He explained assessments were calculated by pool year and member market-share and that more than 80% of the assessed funds were remitted within the first ten days.

Claims response and payments: Fair Plan staff said they received over 5,500 claims from the recent fires, roughly half categorized as total losses, and had closed more than 3,000 claims with approximately 2,400 still open at the time of testimony. Roach said the Fair Plan has paid more than $2.9 billion so far and expects payouts to approach $4 billion overall. The plan expanded staff temporarily — adding several hundred adjusters and desk staff — and extended customer service hours and outreach in affected communities.

Smoke claims: The Fair Plan stressed that its policy covers "smoke and fire when there's direct physical loss." Roach told the committee that smoke alone is not necessarily a covered loss unless it produces a demonstrable physical change to property; examples include permanently damaged electronics, carpeting or furniture that cannot be restored. "If it needs to be repaired so if it needs to be, deodorized, we will deodorize," she said. The plan said it sends independent adjusters to inspect claims and will reassess claims if damage appears after initial cleaning.

Financial stability and depopulation: Committee members pressed the Fair Plan on long-term solvency. Roach said the organization has worked with the California Department of Insurance (CDI) and the Legislature on several initiatives intended to open the market and help the Fair Plan depopulate — that is, move policyholders back to the admitted market. Feliciano described a Clearing House platform established by legislation to facilitate transfers from the Fair Plan to private carriers but noted the Fair Plan does not control broker or private-carrier decisions: the broker and the private insurer must agree to place the business.

Legislation and tools discussed: witnesses identified several bills and regulatory items bearing on Fair Plan operations, including AB 226 (access to line-of-credit and bonds), AB 290 (renewal grace-period provisions), SB 525 (replacement coverage for manufactured and mobile homes), and AB 69 (depopulation measures). Roach and Feliciano said the Fair Plan supports AB 226 to obtain a line of credit and bond access to increase short-term liquidity and reduce near-term reliance on assessments.

Rates and market signaling: Fair Plan witnesses said their average dwelling premium rose from about $1,839 in 2021 to roughly $2,800 in 2025 while average policy limits rose from about $684,000 to just over $1 million. Feliciano and Roach said actuarially sound rates are critical: if Fair Plan rates are lower than the admitted market in low-fire-risk areas, there is less incentive for policyholders to leave. The Fair Plan said it is filing with CDI to seek rates that better reflect expected losses and operating costs.

Public comment and industry views: Representatives from the California Building Industry Association and the Independent Insurance Agents and Brokers of California told the committee that Fair Plan growth signals a weakened voluntary market and urged quicker market re-engagement, adequate rates and legislative tools that enable depopulation.

Looking ahead: Fair Plan leaders said they are increasing transparency by posting data, policy forms and financial reports on their website and will continue outreach in affected communities. They urged completion of regulatory and legislative reforms to re‑open admitted-market capacity and make depopulation feasible. The committee requested follow-up data on nonrenewals, claim denial rates and granular claims-payment statistics; Fair Plan staff committed to follow up in writing.