New California bill focuses on shoring up insurance in wake of devastating fires

SACRAMENTO, Calif. (CN) — Two California Assembly members responded Thursday to the destructive wildfires in Southern California by introducing a bill they say will help with insurance costs.

Assembly Bill 226, called the FAIR Plan Stabilization Act, is intended to help pay for insurance claims through the issuance of catastrophe bonds. That will heighten the ability of the Fair Access to Insurance Requirements Plan to pay claims.

The bill would enable the FAIR Plan to ask the California Infrastructure and Economic Development Bank to issue bonds, if the plan faces liquidity issues in the wake of a significant event like a wildfire.

“AB 226 will alleviate some of the uncertainty that FAIR Plan policy holders may encounter as a result of this tragedy,” said Assemblymember Lisa Calderon, a Whittier Democrat, chair of the Assembly Insurance Committee and one of the bill’s authors, in a statement. “We remain steadfast in acting with urgency to support the impacted communities during this difficult time.”

The FAIR Plan initially was intended as an insurer of last resort. However, it’s become the only option for many California homeowners as insurance costs have skyrocketed.

People’s struggles with finding an insurer willing to cover them, and some insurers leaving the state, led Insurance Commissioner Ricardo Lara last year to begin implementing a series of changes to the industry.

“This bill is an excellent first step, among many we must take, to stabilize California’s insurance market by protecting the FAIR Plan,” said Assemblymember David Alvarez, a San Diego Democrat and the bill’s other author, in a statement. “When disaster strikes, Californians should be able to count on their insurance coverage to pay out valid claims.”

Assembly Speaker Robert Rivas, a Hollister Democrat, announced plans for the bill on Thursday. He said many of his colleagues are in Los Angeles to help, volunteering with local efforts and ensuring people and organizations have the resources they need.

Speaking to the media, Rivas said the Assembly will introduce legislation focused on recovery efforts, as well as a bill to expedite homeowner insurance claims.

“When the time is right, I will visit the area to assess the situation firsthand and to better understand how we can help with recovery,” Rivas said. “I used to be a first responder and paid-call firefighter, and the last thing I want to do is get in the way of the emergency response work that is going on right now.”

California Republicans have slammed Governor Gavin Newsom and other Democratic leaders, including Los Angeles Mayor Karen Bass, on their response to the Southern California fires.

Assemblymember Carl DeMaio said in a Thursday statement that “liberal politicians” should be held accountable, as current law will make it extremely difficult for people to rebuild.

DeMaio pointed to many of the destroyed homes as sitting in the California Coastal Zone, which faces a set of regulations he called slow and under the purview of an anti-housing coastal commission.

The San Diego Republican called for Newsom to invoke a special session of the Legislature to fire-proof California, and discard the existing special session intended to “Trump-proof” the state.

The devastating wildfires in Southern California have drawn headlines for their level of destruction and the Hollywood stars who have fled their homes.

The Palisades Fire in Los Angeles County — northwest of Santa Monica — had reached over 17,000 acres on Thursday. It was zero percent contained.

The Eaton Fire — also in Los Angeles County, north of Pasadena — exceeded 13,600 acres on Thursday. It had destroyed some 4,000 structures and was zero percent contained.

Both blazes began Tuesday.