For years, California made insurers set the wildfire part of their rates from historical losses, and many insurers limited new policies in wildfire areas. The strategy lets them use forward-looking wildfire models and count part of what they pay for reinsurance. The catch is a commitment: insurers using those tools have to write more homes in areas the state lists as wildfire-distressed. It doesn’t guarantee any one house an offer, but it is why a number of carriers have filed to grow in California again. If you’re on the FAIR Plan, it’s a reason to keep shopping.
What the strategy is
The Sustainable Insurance Strategy is a package of executive actions California Insurance Commissioner Ricardo Lara announced on September 21, 2023, the same day Governor Gavin Newsom issued an executive order urging prompt regulatory action in support of it. The Department of Insurance calls it the largest insurance reform since voters passed Proposition 103.
The basic trade: insurers get rating tools they had asked for, namely forward-looking catastrophe models and a share of their reinsurance cost, and in return commit to writing more homes in wildfire-distressed areas. The package also set out to improve rate filing procedures and timelines and to change the FAIR Plan.
Catastrophe models in wildfire rates
For 30 years, California rules had insurers set the catastrophe part of a rate from historical wildfire losses. On December 13, 2024, the Department announced it was enforcing its catastrophe modeling and ratemaking regulation after the Office of Administrative Law filed it with the Secretary of State. The Department’s commitment form refers to catastrophe modeling as permitted by 10 CCR § 2644.4.5.
Building on the Commissioner’s Safer from Wildfires program, the regulation requires catastrophe models to account for mitigation by homeowners, businesses and communities. Once a model has gone through a Department review called a pre-application required information determination (PRID), an insurer can use it in a rate filing that lists its commitments to write more policies. The Department said it would accept PRID petitions starting January 2, 2025. It finished its review of the first wildfire model in July 2025, and completed first-ever reviews of three wildfire catastrophe models that year.
Reinsurance cost in rates
Reinsurance is the coverage insurers buy for their own catastrophe losses. On December 30, 2024, the Commissioner issued the Net Cost of Reinsurance in Ratemaking regulation, which the Department called the final major step in the strategy and lists as adopted among its significant 2025 rulemakings. It lets insurers include an allowed net cost of reinsurance in rates, calculated by one standardized method with a statewide cap.
Two limits matter for policyholders: the cost is limited to California-only risk, so Californians don’t pay for disasters in other states, and insurers must use the same catastrophe model for their rates and their reinsurance figures, which the Department says ends “model shopping.”
What insurers commit to in return
- The 85% benchmark. The Department’s December 2024 releases say major insurers using these tools must increase comprehensive policies in wildfire-distressed areas to no less than 85% of their statewide market share, continuing to increase by 5% every two years until they get there. Smaller and regional companies must also increase their writing. Insurers document this on a commitment form under 10 CCR § 2644.4.8.
- Which areas count. The Department describes distressed areas as places where wildfire is a threat, insurers have reduced or restricted writing, and FAIR Plan policies are concentrated, identified by ZIP code and county. Its strategy page, updated February 2026, lists 662 distressed ZIP codes, and its March 2025 lists are split into residential and commercial. When it proposed the rule in June 2024, it described ZIP codes in high or very high Cal Fire hazard zones with a FAIR Plan concentration of 15% or more or meeting an affordability index, and counties where at least one in five properties sits in a high-risk area.
- Where it stands. The Department began receiving strategy rate filings in the second half of 2025 and approved the first two by year end. On July 23, 2026, it reported 11 homeowners insurance groups and 2 major commercial insurers committing to grow in the state under the strategy.
FAIR Plan changes
- Assessments. Under a July 26, 2024 stipulation and order between the Department and the FAIR Plan, once FAIR Plan reserves are exhausted and its reinsurance and catastrophe bonds have been triggered, member insurers pay half the cost of losses up to $2 billion in total FAIR Plan claims, and the other half can be recouped from policyholders only with the Commissioner’s prior approval. Bulletin 2025-4 lets an insurer seek to recoup up to half of its allocated assessment under $1 billion, with prior approval, through a temporary supplemental fee for no more than two years, and bars passing assessment costs into future rates.
- Larger commercial limits. A temporary high-value commercial option, available July 26, 2025 and set to sunset July 26, 2028, covers up to $20 million per building and $100 million per location for HOAs, housing developments and businesses.
- Reporting and the clearinghouse. Expanded public reporting took effect July 1, 2025. Separately, Insurance Code § 10095 requires the FAIR Plan to run residential and commercial clearinghouse programs that give admitted insurers a chance to offer policies to FAIR Plan policyholders.
What it means if you’re shopping now
The commitments are measured across an insurer’s whole book, not promised house by house. Each company still underwrites each home: roof, defensible space, distance to brush, claims history and mitigation work. The Department’s own advice to FAIR Plan policyholders is to shop the market regularly, contact more than one agent or broker, and ask which companies are writing new policies in their area.
That’s how I work it: admitted carriers first, then the FAIR Plan with a difference-in-conditions policy only if nothing admitted fits. If you just got a notice, start with what to do after a wildfire non-renewal. More on how the FAIR Plan works and who insures homes in wildfire areas.
Common questions
Does the strategy guarantee me a policy from a regular insurer?
No. Commitments are measured across an insurer’s book in distressed areas, and each company still decides whether to offer a policy on a given home.
What is a wildfire-distressed area?
A ZIP code or county the Department of Insurance designates as distressed because wildfire is a threat, insurers have reduced or restricted writing and FAIR Plan policies are concentrated. Its strategy page, updated February 2026, lists 662 distressed ZIP codes, and its March 2025 lists are split into residential and commercial.
What is the 85% commitment?
Under the Department’s December 2024 releases, major insurers using the new tools must write comprehensive policies in distressed areas equal to at least 85% of their statewide market share, continuing to increase by 5% every two years until they reach it. Smaller and regional insurers must also increase their writing.
Can my insurer charge me for a FAIR Plan assessment?
Under Bulletin 2025-4, an insurer can seek prior approval to recoup up to half of its allocated assessment under $1 billion through a temporary supplemental fee for no more than two years, and can’t build it into future rates.
Should I leave the FAIR Plan now?
Shop it. The Department advises FAIR Plan policyholders to check the market regularly. Move only once an admitted policy is bound, so you never have a gap.
Sources
- California Department of Insurance: Sustainable Insurance Strategy (updated February 2026)
- CDI press release, September 21, 2023: Sustainable Insurance Strategy announced
- CDI press release, July 26, 2024: FAIR Plan modernization (Stipulation and Order No. 2024-1)
- CDI press release, December 13, 2024: catastrophe modeling regulation enforced
- CDI press release, December 30, 2024: Net Cost of Reinsurance in Ratemaking regulation issued
- CDI presentation, June 2024: Sustainable Insurance Strategy, insurance commitments for wildfire distressed areas
- CDI FAQ, October 3, 2024: insurer commitments for wildfire-distressed areas
- CDI Residential Insurer Commitment form under 10 CCR § 2644.4.8 (July 14, 2025 edition)
- CDI 2025 Annual Report of the Insurance Commissioner (July 31, 2026)
- CDI alert, August 3, 2026: FAIR Plan growth slows below 2%
- CDI alert, July 23, 2026: Insurance surge expanding options for Californians in wildfire distressed areas
- California Insurance Code § 10095 (FAIR Plan clearinghouse programs)
General information about California’s Sustainable Insurance Strategy as of October 2026, not legal advice; the regulations in Title 10 of the California Code of Regulations, the Insurance Code and Department of Insurance orders and bulletins control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.