California FAIR Plan clearinghouse now covers commercial policies

The goal is to transfer policies into the voluntary market

California FAIR Plan clearinghouse now covers commercial policies


By Kenneth Araullo

As of July 1, commercial policies are eligible for the California FAIR Plan Association’s clearinghouse, a program designed to reduce the number of policies written by the state’s insurer of last resort.

Private insurers participating in the clearinghouse receive policy data, excluding policyholder contact information, to help them determine if they can offer coverage. The goal is to transfer policies into the voluntary market, thereby reducing the FAIR Plan’s significant risk exposure, according to a release from the state-backed carrier.

According to a report by AM Best, since 2019, the number of commercial policies in the FAIR Plan’s book of business has grown by 116%, while premiums from commercial accounts have increased by 301.28% since 2021, according to the carrier’s website. As of March 2023, the FAIR Plan had 9,939 commercial policies in force, totaling $83 million in written premium.

The FAIR Plan clearinghouse was established in 2020 to move dwelling policyholders back into the voluntary insurance market, according to a release from the state-backed insurer. In 2023, the state enacted SB 505, expanding the program to cover commercial properties.

The insurer of last resort emphasized that the clearinghouse is designed as a collaborative platform for brokers and carriers to identify policies best suited for placement in the voluntary market.

The legislation updating the clearinghouse rules is part of a series of measures aimed at stabilizing California’s property insurance market. Other significant updates under consideration include the use of catastrophe models in rating filings and an expedited approval process for homeowners rates.

Elsewhere in the state, Consumer Watchdog has once again raised strong concerns over proposed regulations from California Insurance Commissioner Ricardo Lara, claiming they will make home insurance even more unaffordable and difficult to obtain for many residents.

According to the organization, the regulations, which purport to require insurance companies to increase sales to homeowners in distressed areas, do not mandate “affordable pricing” – something that might well force careers to stay away from the crippled California market.

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