The Plan
FAIR Plan reform
The FAIR Plan is exposed to $458 billion in risk. The reserves to cover it do not exist.
The California FAIR Plan was created as an insurer of last resort, intended to be small and temporary. It is now the fastest-growing insurer in the state, with 1.7 million Californians on it, and a total risk exposure that dwarfs its reserves by an order of magnitude.
The numbers
- 1.7 million Californians currently on FAIR Plan coverage, triple the 2018 count.
- $458 billion in total exposure across residential and commercial policies.
- Reserves sufficient to cover only a small fraction of a single major catastrophe.
- Coverage limits capped at $3 million per home, leaving most LA-area homeowners materially underinsured.
Why this is dangerous
When the FAIR Plan runs out of money after a major loss event, the shortfall gets assessed back onto private insurers operating in California. Those costs flow through to consumer premiums. In effect, every homeowner in the state subsidizes the FAIR Plan whether they are on it or not. Without structural reform, a single bad fire season becomes a market-wide premium shock.
Sean's reform
- Reduce dependency. The CCRP backstop allows primary carriers to write policies again, shrinking the FAIR Plan back toward its intended scale.
- Raise coverage limits in step with actual property values in fire-exposed counties, paired with mandatory mitigation.
- Mandate transparent reserving with public quarterly disclosures of exposure-to-reserve ratios.
- Phase in catastrophe-bond capacity to spread tail risk to capital markets instead of California ratepayers.
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