Insurance Commissioner Ricardo Lara has released a series of proposals to reform the state’s insurance regulations and prevent more residents and businesses from losing policies.
One goal is to reduce the number of policies within the California FAIR Plan. The program, which is run by insurance companies, has stepped in to provide basic coverage as a last resort. The plan has ballooned over the last five years as the insurance crisis unfolds, expanding from about 150,000 residential policies to now more than 400,000.
As it grows, the threat of its insolvency looms greater if another major wildfire disaster strikes.
“What happens if three megafires join and wipe out half of Northern California and the FAIR Plan is not going to be able to cover all those policies?” said Lara, describing such an “Armageddon” situation during a recent discussion hosted by CalMatters.
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Yet that could be closer to a reality than Lara described. Peter Ansel, a senior policy advocate at the California Farm Bureau, told Agri-Pulse recently that the state got a fortunate break this summer. The Park Fire rapidly grew to become the fourth largest on record, destroying more than 700 structures.
“We're all just pretty lucky that it hadn't burned a community to the ground,” said Ansel.
He wondered if the companies in the FAIR Plan would “stick to the deal” and assess every property within the plan to make them whole.
