To respond to California’s growing insurance crisis, Lara says, state lawmakers must consider legislation “that would allow the FAIR Plan to access credit lines and catastrophe bonds to help pay claims in worst-case scenarios”.
All private insurers operating in California are required to contribute to the Fair plan, a plan of last resort established so all Californians would have access to fire insurance.
In 2023, California’s largest insurers included State Farm, Farmers Insurance Group and CSAA Insurance, according to Moody’s, a credit rating service.
California’s home-insurance safety net does not have enough money to pay all of the claims from damage caused by the Los Angeles wildfires and has asked private insurers to contribute $1bn toward those claims.
But, at a time when property insurers have already begun leaving the state, the record assessment may trigger insurers to stop doing business entirely in California.
