"There were nearly 600,000 home policies on the FAIR Plan as of June. Leaders of the plan last year warned state lawmakers that it could go insolvent after a major wildfire or disaster. That reality came true earlier this year after wildfires swept through Los Angeles and destroyed more than 17,000 structures. The plan faced a loss of roughly $4 billion and needed a $1 billion bailout from private insurers to pay out claims."
"The law Newsom signed allows the FAIR Plan to request state-backed loans and bonds and spread out claims payments over multiple years after a disaster. Insurance companies were previously required to pay the full bailout within 30 days. Supporters of the new law said it will prevent the need for future bailouts that raise rates for everyone. The kinds of climate-fueled firestorms like we saw in January will only continue to worsen over time."
Governor Gavin Newsom signed bipartisan legislation giving the California FAIR Plan authority to request state-backed loans and issue bonds to spread disaster claim payments over multiple years. The FAIR Plan provides temporary insurance to homeowners who cannot obtain private coverage and held nearly 600,000 policies as of June. Officials warned it could become insolvent, and recent Los Angeles wildfires destroyed more than 17,000 structures, producing roughly $4 billion in losses and prompting a $1 billion private-insurer bailout. Previously insurers had to pay such assessments within 30 days. Supporters say the new law will reduce emergency bailouts and limit rate increases as climate-driven fires worsen. Half of the recent bailout cost is expected to be passed onto all policyholders.
Read at www.mercurynews.com
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