California’s property insurer of last resort adds record number of policies in February [The Sacramento Bee]
The insurance that property owners turn to when everyone else turns them down has hit a new record.
In February, the California FAIR Plan wrote more than 15,000 new policies, its president
“We continue to grow at a very rapid rate,” Roach said during an Assembly Insurance Committee hearing.
In all, the non-profit — established by the state as an insurer of last resort — has about 373,000 property policies, a figure that includes both homes and businesses. The total has more than doubled since September of 2019.
The accelerating expansion is the latest sign of California’s unstable insurance market. In the wake of destructive and expensive wildfires in recent years, major insurers have restricted or paused new business and have told many policyholders their coverage would not be renewed. Others have decided to pull out of the state completely.
That has left residents with fewer or no choices for fire coverage. The FAIR Plan is supposed to be an all-else-failed option. Yet now, Roach said, it is quickly moving to be the “first resort” for many homeowners.
That includes properties that are not even in areas at high risk of wildfires. Those made up about 40% of the insurer’s new business in September, Roach said.
“We’re seeing a lot of growth in the no-or-low wildfire hazard areas.” She attributed it to residents having fewer options in the current insurance market.
Assemblyman
The historic uptick comes as Insurance Commissioner
“A growing FAIR Plan is a problem,” Soller said, “not just for FAIR Plan policyholders but for our entire state.”
Even though the insurer is not a state agency and is not taxpayer funded, any major payout it has to make still could hurt homeowners.
The likelihood of that happening is increased because the FAIR Plan issues policies, no matter where properties are located. Consequently, it has a large number of homes in areas with high wildfire risks.
The FAIR Plan has cash reserves and insurance to help cover the cost of losses. However, if those losses exceed the reserves and insurance then the FAIR Plan can ask the companies that write policies in
“It feels like a big gamble in many ways,” Wood said.
Roach agreed, adding the insurer was one large wildfire away from needing that emergency action.
©2024 The Sacramento Bee. Visit sacbee.com. Distributed by Tribune Content Agency, LLC.


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