How the California FAIR Plan Must Evolve to Survive
Published Date: 10/18/2025
California’s insurance market is in a state of unprecedented upheaval. As private carriers continue to pull back from writing homeowners policies in high-risk areas, more residents are being pushed toward the California FAIR Plan, the state’s insurer of last resort.
Originally designed as a limited safety net, the FAIR Plan has now become the primary source of coverage for hundreds of thousands of Californians. As its size and complexity grow, so do its operational challenges.
Speaking before a California legislative committee, veteran insurance broker Karl Susman—who has spent more than 30 years in the industry—outlined three critical areas where the FAIR Plan must urgently improve to meet today’s realities. He calls them the Three T’s: Training, Technology, and Transparency. These pillars, Susman argues, are essential if the FAIR Plan is to evolve from a strained emergency mechanism into a functional part of California’s modern insurance ecosystem.
The Growing Strain on the California FAIR Plan
Before diving into solutions, it’s important to understand what’s happening on the ground.
California’s insurance market has been battered by escalating wildfire losses, inflation-driven repair costs, and regulatory constraints that make it nearly impossible for insurers to charge actuarially sound rates. As a result, many national carriers—including State Farm, Allstate, and Farmers—have paused new business or sharply reduced their exposure in the state.
When private carriers retreat, the FAIR Plan must step in.
The number of FAIR Plan policies has more than doubled in five years, surging past 400,000. Many of these are not rural cabins in the woods—they are suburban homes, small businesses, and urban properties that once had no trouble finding standard coverage.
But the FAIR Plan was never built to serve as a major-market player. Its infrastructure, staffing, and systems were designed for limited, specialized use. Now, that mismatch is leading to delays, errors, and widespread frustration among agents and policyholders alike.
Training: Preparing Agents for a New Insurance Reality
Susman’s first “T” is Training, and he points to a striking reality: the number of agents writing FAIR Plan policies has ballooned to around 50,000—many of whom have never written one before.
“These are people who probably would not have written a policy in the past at all,” Susman explained. “All of a sudden, they’re writing FAIR Plan policies. The likelihood of them doing it correctly is pretty low or impossible without training.”
Unlike private insurers, the FAIR Plan does not currently require certification or specialized training for agents to sell its policies. That gap has real consequences. In the standard market, carriers require producers to demonstrate product knowledge before binding coverage. FAIR Plan policies, by contrast, are often sold by agents unfamiliar with the nuances of its limited coverage forms.
The result is predictable: mistakes, incomplete applications, and confused consumers.
Many homeowners believe they are purchasing full homeowners insurance when, in reality, the FAIR Plan provides fire-only coverage. Unless an agent pairs it with a supplemental Difference in Conditions (DIC) policy, policyholders are left dangerously underinsured.
Susman proposes a formal certification program that would require agents to demonstrate knowledge of what the FAIR Plan covers and excludes, how to properly quote and bind policies, and how to combine FAIR coverage with DIC or companion policies. Such a program would reduce errors, improve consumer understanding, and restore trust between brokers, clients, and the FAIR Plan itself.
Technology: Modernizing Systems to Handle Modern Demand
The second critical pillar is Technology, an area where the FAIR Plan has faced repeated challenges.
Recently, the organization rolled out a new digital policy system intended to streamline operations and improve efficiency. Instead, it created a temporary bottleneck—what Susman described as “the perfect storm.”
“The carriers aren’t writing, the FAIR Plan has to write more, more brokers are coming in, and then a new system launches,” he said. “It’s been very challenging.”
Agents have reported long wait times, technical glitches, and inconsistent communication. Even basic tasks, like reaching someone by phone, have become difficult.
“We’re so excited about a new phone system,” Susman joked, “because that’s where we are now—celebrating phone upgrades.”
Behind the humor lies a serious concern. A system built for a few thousand annual applications cannot support hundreds of thousands of policies without major investment. The FAIR Plan’s technology must scale to meet its new reality.
That includes building IT systems capable of handling high-volume digital workflows, improving real-time communication tools for brokers and consumers, and creating better integration between FAIR Plan systems and private carrier platforms.
A modern, resilient technology platform would not only speed up processing times but also give brokers and consumers confidence during one of the most stressful moments of coverage transition.
Transparency: Improving Communication With Agents and Consumers
The third “T” is Transparency, and it may be the most critical of all.
Independent agents are the primary communication bridge between the FAIR Plan and the public. They are the ones explaining to homeowners why their policies were non-renewed, why they must move to the FAIR Plan, and what that change actually means for their protection.
Yet too often, agents themselves have limited visibility into the FAIR Plan’s internal processes.
“We’re the ones with the licenses who have to explain to the consumers what’s going on,” Susman told lawmakers. “More information from the FAIR Plan would help us do that.”
He urged the FAIR Plan to provide regular updates on upcoming technology changes, service interruptions, policy updates, and regulatory developments. Even a consistent monthly bulletin could dramatically improve understanding in the field.
Transparency is not just about courtesy. It is about empowerment. When agents are informed, consumers receive better advice, fewer mistakes are made, and the entire system operates more smoothly.
What the FAIR Plan’s Challenges Reveal About the Broader Market
The issues Susman highlighted extend far beyond the FAIR Plan itself. They reflect the deeper dysfunction in California’s insurance ecosystem—a marketplace strained by regulatory inertia and widespread insurer withdrawal.
The FAIR Plan’s current strain is a symptom, not the root cause. Without broader reforms such as faster rate approvals, modern catastrophe modeling, and updated mitigation incentives, the FAIR Plan will continue to serve as the default insurer for too many Californians.
Still, meaningful progress can be made immediately by addressing the Three T’s.
Training ensures that consumers understand what they are buying.
Technology ensures that coverage can be issued quickly and accurately.
Transparency ensures that agents, regulators, and homeowners all share a clear understanding of what is happening and what is coming next.
Together, these improvements could significantly reduce friction and restore confidence in a system under immense pressure.
The Human Impact Behind the FAIR Plan Crisis
Behind every policy written is a household trying to protect its most valuable asset. Many are families who have just received non-renewal notices from insurers they relied on for decades.
For brokers like Susman, these are not abstract policyholders. They are neighbors, small business owners, and long-time clients.
“We’re the face to the consumers,” he reminded the committee. “We’re the ones who have to explain why they’re being non-renewed and why they have to go with the FAIR Plan.”
That role demands compassion, clarity, and competence. All three depend on a FAIR Plan that supports, rather than obstructs, the professionals tasked with guiding the public through this crisis.
A Call for Collaboration to Stabilize the FAIR Plan
Susman’s testimony was not framed as an attack on the FAIR Plan, but as a call for cooperation. The FAIR Plan’s leadership, staff, and the California Department of Insurance are all operating under extraordinary constraints. But without focused improvements, the system risks falling further behind as demand continues to rise.
The path forward lies in collaboration among regulators, insurers, and frontline agents. By implementing mandatory training, accelerating technology upgrades, and enhancing communication, California can take practical steps toward a more stable and responsive FAIR Plan.
The FAIR Plan was never intended to insure nearly half a million homes. But that is the reality California faces today. While the broader insurance market remains in flux, fixing the FAIR Plan begins with three essential actions: Training, Technology, and Transparency.
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