By Michael Tellez, FOX26 NEWS
CALIFORNIA (FOX26) — A new report is raising questions about how California’s wildfire insurance system ended up where it is today.
With hundreds of thousands of homeowners relying on the state’s fair plan as their only option.
The fair plan was originally designed as a last resort, but a New York Times investigation found that policy loopholes helped shift more properties onto that plan instead of keeping them with traditional insurers.
To stabilize the state’s insurance market, state leaders reached a deal in 2023 allowing companies to raise rates if they continued offering coverage in high fire-risk areas.
The idea was to keep homeowners in wildfire zones insured by requiring companies to write policies in those communities at nearly the same level as the rest of the state.
But a new analysis shows that loopholes in those rules allow insurers to meet the requirements without taking on homes in the highest-risk fire areas.
In many cases, companies can focus on lower-risk neighborhoods inside large “distressed” zip codes and still qualify for rate increases.
As a result, the state’s fair plan has nearly doubled in size.
Many homeowners who were dropped by their insurers have been forced onto that plan, often paying *more* for *less* coverage.
Insurance regulators say they were negotiating during a period when major companies had already begun limiting new policies in California, and they hoped rising rates would eventually draw insurers back into fire-risk communities.
But consumer advocates warn that homeowners in fire-prone regions remain vulnerable, and the full impact of the reforms may not be clear for another year or more.
Survivors of the Palisades and Eaton fires are calling for state insurance commissioner Ricardo Lara to resign.
A press conference was scheduled for 10 a.m. on Thursday in Altadena.
Families displaced by the fires and advocacy groups will also be in attendance and are expected to call on Governor Newsom to replace Lara as commissioner.
FOX26 News reached out to Commissioner Lara’s office for comment.