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As California grapples with a deepening insurance crisis, the California FAIR Plan Association, the state's "insurer of last resort," has come under increased legislative scrutiny. With demand surging and private insurers retreating from high-risk areas, many experts believe the FAIR Plan is at a breaking point. At a recent California State Assembly Insurance Committee Hearing, Karl Susman, an experienced independent insurance broker, delivered a critical commentary on what’s needed to stabilize and save the FAIR Plan. His message centered on “The Three T’s”: Training, Technology, and Transparency.
1. The FAIR Plan’s Expanding Role — and Growing Pains
The California FAIR Plan was established in 1968 as a temporary safety net for homeowners who couldn’t obtain insurance in high-risk areas, particularly due to wildfire risk. However, with carriers like State Farm, Allstate, and Farmers pulling out of the state or freezing new business, the FAIR Plan’s role has rapidly expanded, with an increasing number of agents now offering its policies.
Susman noted that this sudden influx of new agents, many without proper training or familiarity with the FAIR Plan’s guidelines, poses significant challenges.
“The likelihood of them doing it correctly is pretty low or impossible without training,” Susman cautioned.
2. The First “T”: Training — The Foundation for Fair Coverage
Susman highlighted training as the first and most crucial step in improving the FAIR Plan. He proposed mandatory broker certification for anyone authorized to write FAIR Plan policies.
“If you write with any other insurance company,” he explained, “you have to show the carrier you know their product—how to quote it, what it covers. I would suggest maybe the same thing for the FAIR Plan.”
A standardized certification program could help ensure that brokers fully understand the FAIR Plan guidelines, reducing common errors like coverage gaps and billing issues. This move would not only improve customer satisfaction but also alleviate administrative strain on the FAIR Plan’s overwhelmed support team.
“Training is where it starts,” Susman said. “Without it, we’re setting consumers—and ourselves—up for failure.”
3. The Second “T”: Technology — The System Is Overdue for an Upgrade
Susman didn’t mince words when discussing the FAIR Plan’s technology woes. After launching a new online system designed to streamline policy submissions, the system was met with widespread complaints about delays, bugs, and access issues.
He described the situation as a “perfect storm” where a rush of new brokers and agents coincided with a flawed system rollout, creating a customer service crisis.
“We’re that excited because the phones are getting upgraded,” Susman joked. “That’s where we are now.”
While Susman acknowledged the FAIR Plan’s efforts to improve, he stressed that the technology must be modernized to keep pace with growing demand.
“Focusing on technology is essential,” he said. “We need systems that can handle today’s demand—not yesterday’s.”
4. The Third “T”: Transparency — Communication Builds Confidence
Transparency, according to Susman, is the key to restoring trust between the FAIR Plan, brokers, and consumers. He explained that brokers often feel left in the dark when it comes to updates on system changes, policy modifications, or ongoing operational challenges.
“For us to have more information from the FAIR Plan—maybe a list that says, ‘Hey, these are the things we’re working on technology-wise,’ or ‘We’re upgrading the phones,’” Susman said. “Just to keep us in the loop.”
Brokers, who are the primary point of contact for consumers, need regular updates from the FAIR Plan to explain changes and manage customer expectations. Better transparency could reduce misinformation and improve the overall customer experience.
“It’s hard when you’re out there,” Susman said. “We’re the ones who have to explain to the consumers why they’re getting non-renewed, why they have to go with the FAIR Plan.”
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5. Lawmakers Take Notice
Susman’s remarks resonated with lawmakers during the Assembly hearing. Several committee members expressed support for his suggestions, with Chairwoman Lisa Calderon thanking Susman for his “practical, field-based insight.”
The Assembly hearing was part of a broader legislative review driven by complaints about delays, errors, and lack of accountability within the FAIR Plan. Several reform bills have been proposed, including:
- Increasing FAIR Plan staffing and funding
- Mandating service standards for claims response times
- Expanding coverage options to include liability and theft
- Creating a public oversight mechanism to track performance metrics
Susman reinforced that operational improvements should be prioritized over new regulations, emphasizing the need for systemic reform rather than just increased funding.
“If we can focus on these three T’s,” Susman said, “we can make this system more efficient, more reliable, and more transparent for everyone—brokers and consumers alike.”
6. The Broader Context: A System at the Breaking Point
The FAIR Plan’s struggles reflect a wider crisis in California’s insurance market. Private insurers have drastically reduced their presence in wildfire-prone areas, citing inflation, reinsurance costs, and outdated regulations like Proposition 103. As a result, over 350,000 homeowners have been pushed onto the FAIR Plan—nearly double the number from just five years ago.
Susman argued that while increased funding is important, the survival of the FAIR Plan depends equally on operational competence and collaboration between lawmakers, regulators, and industry professionals.
7. Moving Forward: Collaboration Over Confrontation
Susman’s “Three T’s” offer a straightforward roadmap for reform:
- Training ensures brokers are equipped to serve consumers correctly.
- Technology ensures systems can handle demand efficiently.
- Transparency ensures accountability and trust between the Plan, brokers, and the public.
“These aren’t political slogans,” Susman emphasized. “We don’t need another task force. We need communication, consistency, and competence. That starts with these three T’s.”
8. A Moment of Clarity Amid Crisis
Among the technical jargon and policy debates, Susman’s testimony stood out for its simplicity and sincerity. Rather than asking for subsidies or sweeping regulatory changes, he called for modernization, professionalization, and improved communication within the FAIR Plan.
It was a reminder that, even amidst California’s insurance turmoil, practical solutions grounded in common sense can still make a significant impact.
For the thousands of homeowners relying on the FAIR Plan for coverage, those changes can’t come soon enough.
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