SACRAMENTO — Almost six months after a firestorm ravaged communities throughout Los Angeles, California lawmakers are crafting laws to attempt to shield the state insurance coverage program for high-risk properties from monetary collapse.
A invoice, AB 226, sponsored by Assemblymembers Lisa Calderon (D-Whittier) and David A. Alvarez (D-San Diego), would make the state’s insurer of final resort, the FAIR Plan, eligible for loans and bonds from the state-backed California Infrastructure and Financial Improvement Financial institution to keep away from operating out of cash after a catastrophe.
Alvarez proposed the measure final yr nevertheless it didn’t go. Regardless of receiving unanimous assist within the Meeting, the invoice by no means reached the Senate flooring for a vote earlier than the top of the 2024 legislative session.
If the measure had handed final yr and been signed into regulation by the governor, the FAIR Plan would have had extra flexibility to climate the huge variety of claims filed after the January firestorms, Alvarez stated.
As a substitute, the FAIR plan was pressured to imposed an additional $1 billion in complete assessments on insurers that present householders insurance policies in California. To recoup these bills, insurance coverage corporations are anticipated to hike charges on householders via month-to-month surcharges.
“Had they had this option available to them … they would not be having to hit consumers with price increases on the private market now,” Alvarez stated.
AB 226 is certainly one of many wildfire-related payments nonetheless winding their method via the sluggish legislative course of. If handed into regulation, the measures would shield householders from worth gouging after disasters, streamline the method for submitting claims for misplaced property and provide monetary protections for catastrophe victims.
“Tens of thousands of our neighbors, our families and friends, they need help. This means that we need to be able to move with urgency, put aside our differences, and be laser-focused on delivering the financial resources, delivering the boots on the ground that are needed and the policy relief that is needed to get neighborhoods cleaned up and communities rebuilt,” Senate President Professional Tem Mike McGuire (D-Healdsburg) stated after it handed.
California’s last-ditch house insurer, the FAIR Plan, is supposed as a backup for properties deemed high-risk and uninsurable by non-public corporations. A Occasions evaluation discovered that inside the Eaton and Palisades fireplace zones, the variety of properties on the plan almost doubled between 2020 and 2024 and the plan has turn out to be one of many state’s largest insurers.
Amid lawsuits alleging collusion between non-public insurers and the FAIR Plan and policyholders elevating issues about delays in funds and smoke harm investigations, lawmakers and insurance coverage advocates have repeatedly referred to as for higher security nets — just like the one proposed in AB 226 — to maintain the insurer solvent in emergencies and viable as a long-term answer to the state’s house insurance coverage downside.
This yr, Alvarez was joined on the invoice by Calderon, chair of the Meeting’s insurance coverage committee. It handed via the Meeting firstly of March however has not but seen its first Senate committee.
Alvarez celebrated the invoice’s swift passage via the Meeting and hopes the Senate will work to do the identical, “God forbid, if it has to be used because of a devastating fire this summer,” he stated.
Different main wildfire payments being thought of by lawmakers embody:
AB 493, which might require lenders to pay policyholders curiosity on catastrophe insurance coverage payouts which can be held in escrow. The measure, authored by Assemblymember John Harabedian (D-Pasadena) would shut a loophole in present regulation, which already requires curiosity funds on different escrowed funds. AB 597, additionally launched by Harabedian, which might maintain public insurance coverage adjusters from gouging householders, particularly after a pure catastrophe or state of emergency.SB 495, which might stop insurers from requiring an itemized listing of non-public property losses from policyholders throughout a state of emergency, and would require insurers to offer extensions the place reconstruction is delayed. The invoice, launched by state Sen. Benjamin Allen — who represents the Pacific Palisades and Santa Monica areas — handed a Senate flooring vote on Tuesday and is headed to the Meeting.
Many of the pending laws gained’t instantly assist survivors of the Palisades and Eaton fires however are nonetheless essential to the rebuilding course of, stated Maryam Zar, president emeritus of the Pacific Palisades Group Council and founding father of the Palisades Restoration Coalition.
The brand new legal guidelines would assist stop and put together for future fires, she stated, and are a present of goodwill to the communities which can be struggling nonetheless.
“Wildfire survivors continue to face housing insecurity, financial strain, and emotional trauma long after the immediate danger has passed,” Los Angeles County Supervisor Lindsey Horvath stated in an announcement. “These State bills represent a commitment to meeting people where they are — actively in recovery, rebuilding their lives, and in need of our long-term support.”
