FOR IMMEDIATE RELEASE: Feb. 12, 2025
CONTACT
Carter Dougherty
carter@ourfinancialsecurity.org
California Hands $500M Insurance Bailout Bill to Families & Homeowners
WASHINGTON, D.C. – The California State Insurance Commissioner Ricardo Lara approved a $1 billion bailout of the state’s FAIR (Fair Access to Insurance Requirements) plan to help cover over 3,400 claims it has received due to the devastating Los Angeles fires. The FAIR plan provides insurance to consumers who were dropped by their private insurers.
Under the agreement, private insurers in California like State Farm will only pay a little over $500 million altogether, while nearly $500 million will likely be billed to homeowners insurance policyholders in California in the form of assessments. This means that California homeowners will be on the hook to bail out the FAIR plan, regardless of where they live in the state, or whether they can afford to pay a potentially large, unexpected bill. Consumer experts in the state are raising alarm bells that these assessments on homeowners statewide will place an unfair burden on households, and that the new scheme is potentially illegal because of a statutory requirement that private insurers pay for these bailouts.
Private insurers have continued to generate healthy profits on their homeowners insurance lines in California as recently as 2023 according to data from the National Association of Insurance Commissioners and the California Department of Insurance. The insurance industry is still raking in record profits overall as customers pay soaring premiums, while financing and underwriting fossil fuels, the main contributor to climate change.
“California property insurers have profited handsomely by dropping their customers while investing heavily in fossil fuels. It is unacceptable to require regular California families to shoulder half the cost of this insurance bailout by tacking on assessments to their property insurance bills. Insurers should be forced to cover these losses out of the exorbitant profits they have been wringing out of policyholders,” said Caroline Nagy, Associate Director for Housing at Americans for Financial Reform Education Fund (AFREF).
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