Listen: Karl Susman explains two new laws.
AB 226 – FAIR Plan Stabilization Act
- Enables FINANCIAL TOOLS: Authorizes the FAIR Plan (insurer of last resort) to access catastrophe bonds, lines of credit, or loans—through the California Infrastructure and Economic Development Bank—to boost liquidity and claims-paying capacity
- Commissioner Oversight: Requires prior approval from the California Insurance Commissioner and the Bank before issuing any financial instruments
- Member Assessments Triggered: If the FAIR Plan fails to repay, it must assess its insurer‑members (i.e., participating insurers) to meet obligations timely
AB 69 – Broker Duty for Voluntary Market Placement
- Adds Broker Duty Pre‑Renewal: Mandates that, before renewing any FAIR Plan policy, the broker of record must assess whether the risk can transition to a voluntary (admitted) market insurer
- Depopulation Goal: Aligns with broader efforts to reduce FAIR Plan enrollment by transitioning eligible policyholders toward more comprehensive, competitive private-market coverage
- Notice Requirement: Requires that FAIR Plan policyholders receive a prominent (14‑point bold) annual notice encouraging them to explore voluntary-market options and informing them of their rights
AB 226 has the Urgency Clause meaning it goes into effect immediately!