Assemblymember David Alvarez’s Bill to Help Protect California Insurance Consumers Passes Committee

(Sacramento) Today, the Assembly Committee on Jobs, Economic Development, and the Economy passed Assemblymember David Alvarez’s (D-San Diego) Assembly Bill 2996, which would help stabilize the insurance marketplace by bolstering the state's Fair Access to Insurance Requirements (FAIR) Plan and enhancing protections for homeowners, affordable housing developments, condominiums, and apartments.

“As the state takes steps to expand the FAIR Plan to cover a very important part of the housing stock, we must ensure that the association has financial tools available to ensure it doesn’t collapse,” said Assemblymember Alvarez. “AB 2996 ensures that if a significant disaster occurs that bankrupts the FAIR Plan, it has financial tools available to mitigate the impact on the overall insurance market.”

Last year, the California Department of Insurance announced that they would expand the FAIR Plan’s commercial insurance coverage from $20 million per location to $20 million per structure to ensure that condo owners could access the FAIR Plan insurance. Although this is a much-needed step to support first-time homeowner opportunities, it also put an already overexposed FAIR Plan at more risk.

According to the FAIR Plan Association, in 2023, it experienced a 22% increase in its Policies in Force, which currently stands at 350,000. Similarly, its risk exposure was over $311 billion as of December 2023, compared to only $50 billion in 2018. Due to this exposure, one major disaster could result in an insolvent FAIR Plan and its subsequent bail out by member insurers. Assembly Bill 2996 aims to provide financial certainty by increasing the financial tools available to offset the increase in exposure that threatens the FAIR Plan’s solvency.

“The California Building Industry Association (CBIA) commends Assemblyman Alvarez for introducing Assembly Bill 2996. By addressing the unique challenges faced by these types of properties, AB 2996 will improve much needed insurance coverage. This legislation is a key component of the state's efforts to promote housing affordability and resilience in the face of increasing risks from natural disasters and other threats. The passage of this bill will help to safeguard homeowners and support the construction of new housing units, contributing to the overall growth and resilience of California's housing market,” said Dan Dunmoyer, President and CEO of the California Building Industry Association