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California Department of Insurance briefs Lafayette council on wildfire‑driven insurance reforms and asks for local support
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Summary
Sharon Smith of the California Department of Insurance told the Lafayette council the state faces an insurance ‘crisis’ driven by climate and reinsurance costs and outlined multiple bills aimed at FAIR plan reform, disaster recovery and smoke‑damage standards; staff requested draft letters of support the council may consider.
Sharon Smith, outreach analyst for the California Department of Insurance, told the Lafayette City Council that rising climate risk, inflation and higher reinsurance costs have sharply reduced private homeowner insurance options and driven growth in the FAIR plan. "About 1,773 policies in force" were reported for ZIP code 94549, and Smith said that market disruptions produced very large year‑over‑year increases in FAIR plan enrollments.
Smith outlined several bills the department is sponsoring or supporting to expand consumer protections and improve market stability. She described AB1680 (the "Make It Fair" Act) as a measure to require FAIR plan compliance with the insurance commissioner's operational recommendations, create a clearinghouse to help move policyholders back to private markets, and impose fees and due‑process protections for noncompliant plans. On SB876 (the Disaster Recovery Reform Act), Smith said the proposal would require insurers — including the FAIR plan — to adopt disaster recovery plans, double penalties for unfair claims practices, mandate five‑day status updates when an adjuster changes, and expand living‑expense payouts to 100% of policy limits. She also summarized SB1795 (the Smoke Damage Recovery Act), which would create science‑based health standards for inspecting, testing and restoring smoke‑damaged homes and standardize claims handling.
Council members pressed for operational detail. Council member Kandel asked how the California Safe Homes grant will be distributed; Smith replied that the application portal and exact grant mechanics are still being worked out and will be announced via the Department's consumer alerts. Several council members expressed concern that expanding FAIR plan coverage could disincentivize private insurers, while Smith reiterated that the department's stated goal is to move policyholders off the FAIR plan and back into voluntary markets.
Smith provided draft letters of support and offered to follow up by email with the council. The presentation closed with an invitation to contact the Department for consumer alerts and updates on pending rulemaking.
The council did not take immediate formal action at the meeting on the Department of Insurance materials beyond discussion; members indicated they would consider the draft letters and additional information from the department.
