Industry reaction to FAIR Plan modernization in California
Industry reaction to FAIR Plan modernization in California | Insurance Business America
Insurance News
Industry reaction to FAIR Plan modernization in California
Trade body calls move “an important step”
Insurance News
By
Terry Gangcuangco
“An important step” – that is how the American Property Casualty Insurance Association (APCIA) sees California’s move to modernize the “insurer of last resort” in the state.
As part of Insurance Commissioner Ricardo Lara’s sustainable insurance strategy, the California Department of Insurance announced an agreement aimed at modernizing the California FAIR Plan Association (FAIR Plan).
It was agreed that the FAIR Plan will be issuing a new operation plan centered on providing expanded coverage, financial stability, and improved transparency.
“It’s critical for Californians to understand that a growing FAIR Plan contributes to our insurance crisis,” Lara declared. “By strengthening the FAIR Plan while providing financial stability and solvency protections, we are creating long-term security for consumers, homeowners, and businesses across the state that is long overdue.
“Ultimately, we want to reduce the number of homeowners and businesses on the FAIR Plan by strengthening the market overall. My action… is intended to close coverage gaps in the short term for many homeowners’ associations, housing construction projects, and larger businesses, so they aren’t forced to pay even higher costs or go without insurance.
“Requiring the FAIR Plan to take concrete steps to protect policyholders in an extreme disaster will keep it an effective safety net for homeowners and businesses while my reforms to fix the state’s overall insurance market take effect.”
Commenting on the agreement, APCIA vice president for state government relations Mark Sektnan pointed to the intended benefits.
“[The] action is an important step toward restoring the FAIR Plan’s financial stability and ensuring consumers have access to the coverage they need,” Sektnan said. “While some details still need to be finalized, we appreciate the Department’s commitment to implementing reforms that will bring balance back to the insurance market and increase access to coverage for all Californians.”
Consumer Watchdog, however, isn’t as pleased and has a different take on the matter.
“If the FAIR Plan gets into trouble, it will be because insurance companies dumped too many Californians onto its books. Those companies should be on the hook for the fallout, not every homeowner in the state.”
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