California's home insurance crisis has produced plenty of proposed fixes over the past two years. The latest one targets the people who sell the policies.
In an editorial this week, Bloomberg's editorial board said California's FAIR Plan, the state-created insurer of last resort, should start paying insurance agents lower commissions, or none at all, as part of a wider overhaul of how the plan is priced and who can buy into it. It's one of several recommendations in a piece aimed at a program built in 1968 as a temporary stopgap and now the only fire coverage many homeowners can get at any price.
The plan's growth over the past four years has been steep. Total exposure sat at roughly $220 billion in September 2022. By June 2026 it had climbed to $768 billion, an increase of about 250%, according to data reported by KQED from the plan's own disclosures. Policy counts moved the same way, rising from roughly 271,000 in 2022 to more than 675,000 today. In some of the highest-risk ZIP codes, including Truckee, Nevada City, Malibu and Lake Arrowhead, close to half of homes are now insured through the plan instead of the standard market.
That growth sits inside a broader affordability problem. Stanford's Climate and Energy Policy Program found that average California homeowner premiums rose 84% between late 2020 and March 2026, or about 45% after adjusting for inflation, while average deductibles climbed from roughly $1,813 to $2,553 over the same stretch. The same research found FAIR Plan enrollment has nearly tripled as a share of the state's single-family homes, from under 2% to about 5%, and now backs roughly one in 17 new home loans.
The gap between what's insured and what's actually at risk is larger still. McKinsey estimates California's insurance market, FAIR Plan included, faces a coverage shortfall of $1.35 trillion to $2 trillion — the difference between total wildfire exposure and the financial protection actually in place. Closing that gap, the firm says, would take $8 billion to $10 billion in additional annual premium, a bill that would fall on homeowners already struggling to keep coverage at all.
Carrier retrenchment is the reason the plan has grown so fast. Insurance Business has reported that State Farm, Allstate, Farmers, Travelers, Chubb, Nationwide and USAA have all stopped writing new business or non-renewed policies in high-risk areas, sending homeowners toward the residual market. Regulators have already approved a statewide average FAIR Plan rate increase of 29.1%, effective October 15, 2026, the plan's steepest hike in recent history, though smaller than the 36% originally requested.
The commission cut is one piece of a longer list. Bloomberg's board also wants FAIR Plan premiums priced above equivalent voluntary-market policies, the $3 million residential coverage cap reduced, and eligibility tightened, for example by excluding second homes, whose owners can still turn to the surplus lines market. Cutting or eliminating agent commissions on FAIR Plan placements, the board argues, would take away some of the incentive to write business into the plan instead of shopping it in the admitted market first.
That's not currently what's happening in Sacramento. AB 1680, the "Make It FAIR Act" backed by Insurance Commissioner Ricardo Lara and Assembly Insurance Committee Chair Lisa Calderon, is the FAIR Plan bill actually moving through the legislature right now, and it deals with transparency, governance and claims-handling failures identified in the Department of Insurance's December 2025 Report of Examination. Commissions, coverage caps and eligibility rules aren't part of it. Bloomberg's commission proposal doesn't have a bill attached to it yet — it's an editorial position, not pending legislation.
The board pointed to Florida's Citizens Property Insurance Corporation as the model to copy. Florida's clearinghouse lets private insurers make takeout offers on Citizens policies, and under the version Bloomberg favors, a transfer would become mandatory whenever a private offer comes within 20% of the state plan's price. That system has shrunk Citizens noticeably: Citizens' policy count fell from more than 819,000 in May 2025 to roughly 294,000 by May 2026, a drop of about 64% in a year, as regulators cleared one takeout deal after another.
Agents in California have been raising the alarm about this market for years, long before commissions entered the conversation. In 2023 testimony to the Assembly Insurance Committee, the Independent Insurance Agents & Brokers of California told lawmakers its members were seeing the worst property market of their careers, with the FAIR Plan and non-admitted carriers left as the only options for many clients. That pressure hasn't eased. As carriers have kept pulling back and FAIR Plan enrollment has nearly tripled, agents in high-risk regions have come to depend on the plan for a real share of their book.
The plan's finances have also drawn criticism from consumer groups on issues that have nothing to do with commissions. When regulators approved a special assessment on FAIR Plan member insurers last year, Douglas Quinn of the American Policyholder Association told Insurance Business that pushing more homeowners into an already strained system "makes it worse," not better. It's a line that applies just as well to a proposal that would squeeze the economics of the people placing that business.
Nobody has to adopt Bloomberg's commission idea for it to matter. AB 1680 doesn't touch commissions, so getting there would need new legislation, a rate-filing change through the Department of Insurance, or a move by the FAIR Plan's own board of governors. But it's arriving at a moment when several other pressures are already building: the October rate hike, the legislature's scrutiny of the plan's governance, and now an outside push to change how coverage gets sold, not just how it's priced.
