California FAIR Plan Enrollment Climbs as Industry Reforms Loom

California FAIR Plan Sees Enrollment Rise Amid Anticipated Industry Reforms

Enrollment in the California FAIR Plan, the state's insurer of last resort, surged by 4% in the final quarter of 2025, reaching 668,609 active policies. This growth follows a substantial 39% increase in policies during the FAIR Plan's fiscal year ending September 30, highlighting significant trends in industry shifts and regulatory compliance requirements.

The expansion has sparked divergent views between consumer advocates and insurance industry representatives. Consumer groups argue the rising enrollment reflects a deteriorating insurance landscape, while industry officials stress that recent regulatory measures need time for meaningful impact. The debate emphasizes the dynamic relationship between regulatory compliance, underwriting, and claims management within the sector.

From October to December 2025, the FAIR Plan's written premium slightly increased from $1.93 billion to $1.96 billion. Meanwhile, the statewide residential insurance exposure surged by 50% to $645.23 billion, and commercial exposure jumped by 82% to $49.5 billion, highlighting evolving risk management challenges across California.

In response to this surge, the FAIR Plan has proposed a significant rate increase averaging 35.8% for homeowners. This represents the largest adjustment in over seven years, incorporating wildfire catastrophe modeling and reinsurance costs, aligning with regulatory compliance requirements for enhanced risk management strategies.

Consumer Watchdog's Executive Director, Carmen Balber, expressed concern, indicating ongoing issues in the insurance sector despite reforms under Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy. She remarked, "The FAIR Plan added more policies in the last three months than the commissioner’s strategy will add in the state in the next two years."

Conversely, industry experts see a different landscape. Christian Rataj, Senior Vice President of State Government Affairs West at the National Association of Mutual Insurance Companies, noted that regulatory challenges have persisted for many years, but recent reforms are only starting to take effect, potentially enhancing the provider-payer dynamic.

Gabriel Sanchez from the California Department of Insurance (CDI) stated that the FAIR Plan's growth represents only a 0.2% increase out of over 8.6 million homeowners policies statewide, indicating some carriers are committing to expanding their footprint in California. Meanwhile, Mark Sektnan, Vice President of State Government Relations at the American Property Casualty Insurance Association, highlighted new ratings for Mercury General and CSAA that incorporate wildfire models, reflecting a positive shift in underwriting aligned with regulatory compliance.