FAIR Plan Clearinghouse Oversight Hearing
Published Friday, March 20, 2026
On March 18, the Assembly Committee on Insurance held an oversight hearing to examine the “clearinghouse” program within the FAIR Plan. Established five years ago by Assembly Bill 3012 (Jim Wood, D-Healdsburg), the law created a process for insurance policies to exit the FAIR Plan through a platform that allows brokers of record to review policies and move them back into the admitted market. The legislation established a clearinghouse for only residential policies. When agricultural policies entered the FAIR Plan, they were classified as commercial, meaning they were not eligible to use the clearinghouse to exit. In response, Farm Bureau sponsored Senate Bill 505 (Susan Rubio, D-Baldwin Park), which established a clearinghouse for commercial policies and was ultimately signed into law.
This oversight hearing focused on the residential clearinghouse. The FAIR Plan reported that it does not have a complete understanding of whether the program is effective for several reasons. Most notably, insurers self-report why a policy leaves the FAIR Plan and offers made through the clearinghouse are not tracked, making the data inaccurate and unreliable. The FAIR Plan indicated that approximately 750 residential policies have exited to the admitted market through the clearinghouse. Comparable outcomes would likely be expected for the commercial clearinghouse. Committee members expressed concern about the lack of reliable data and were surprised by the low number of policies returning to the admitted market. The FAIR Plan noted that improving data collection would require additional legislation and regulatory action. The FAIR Plan also identified business practices involving brokers, agents and consumers that may be limiting policyholders’ ability to return to the admitted market.
Industry representatives, including independent agents, property and casualty insurers, and surplus lines associations—testified that the clearinghouse is ineffective because the admitted market remains unstable, leaving few viable options for policyholders to return. Testimony also highlighted that FAIR Plan rates are not actuarially sound and are often the lowest available, incentivizing consumers to remain in the FAIR Plan. While only 10 to 15 admitted insurers currently participate in the clearinghouse, industry representatives noted that participation may increase as the market stabilizes. They also emphasized that the clearinghouse is not the sole pathway for exiting the FAIR Plan, as policies may return to the admitted market through other mechanisms not captured in clearinghouse data.
Farm Bureau was the only consumer group to provide public comment, noting that while the hearing focused on AB 3012 and the residential clearinghouse, the commercial clearinghouse established by SB 505 faces similar challenges. Farm Bureau emphasized that consumers should not be limited by prior broker or agent relationships when seeking to return to the admitted market. Additionally, Farm Bureau encouraged legislators to use the clearinghouse to promote competition among admitted carriers, particularly for landowners who have invested in risk mitigation and where wildfire risk is lower, such as on agricultural lands.
Staff contact: Peter Ansel, pansel@cfbf.com.
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