There has been some question about whether California’s insurer of last resort – the FAIR Plan – has enough cash on hand to pay for its share of wildfire claims. As surplus is inadequate and reinsurance has a deductible that exceeds available cash, an industry assessment is inevitable, a Fitch analyst confirmed.
FAIR Plan [Fair Access to Insurance Requirements Plan] doesn’t have enough surplus for this level of fire loss – the biggest California wildfire loss to date, said Gerald Glombicki, senior director at Fitch Ratings in an interview with Insurance Journal.
This means insurers writing business in California ultimately will have to bolster FAIR Plan’s financial position, as will homeowners across the state.
Nearly a year ago, FAIR Plan had $336 billion of property exposure with surplus of just $200 million, and $700 million of cash on hand, said Victoria Roach, who testified before the California Assembly Insurance Oversight Committee on March 13. (Editor’s note: Current figures for this year cannot be confirmed).
According to FAIR Plan statistics, it has $5.9 billion of exposure to the Pacific