2021 California Monument Fire - Engine crew battles flames   Credit: USDA

July 2, 2026 - LOS ANGELES — Insurance Commissioner Ricardo Lara has applauded a judge’s order upholding his authority to protect consumers’ access and stabilize the state’s insurance market. Late Tuesday, Los Angeles Superior Court Judge Tiana J. Murillo rejected a lawsuit filed by Consumer Watchdog. The lawsuit challenged two Bulletins issued by Commissioner Lara aimed at breaking the cycle of insurance unavailability. Commissioner Lara’s actions addressed what a news story called a “hidden crisis” of insurance companies withdrawing from California due to fear of possible major assessments by the FAIR Plan after a major disaster.   

“While critics choose to complain and litigate from the sidelines, we are doing the hard work to fix a broken system, lower reliance on the FAIR Plan, and get companies back to writing policies,” said Commissioner Lara. “This victory sends a loud and clear message: The era of allowing special interests to derail consumer choice is over. We have the momentum, we have the authority, and we will continue to fight until every California has access to the coverage they deserve.”   

Commissioner Lara issued a Bulletin in September 2024 protecting consumers by ensuring that, in an extreme worst-case scenario, insurance companies cannot pass through all excess FAIR Plan losses to their policyholders -- they must be proportional and, if approved, be recovered over no more than two years. That worst-case scenario happened months later with the L.A. wildfires, when Commissioner Lara’s order helped stabilize the insurance market. His February 2025 Bulletin further provided guidance to the procedure for insurers to seek prior approval of pass-throughs under Proposition 103.  

 Notes:  

•  Link to the Judge’s order.  
• Judge Murillo wrote that the Insurance Code Section 10095(c) could permit insurance companies to “pass through” costs of a FAIR Plan assessment and the Insurance Commissioner could put limits on that. “The meaning of Section 10095(c) is plain: it governs how writings, profits, losses, and expenses must be allocated between FAIR Plan member insurers. Petitioner objects to the way the Commissioner permits insurers to handle assessments after they are levied. This does not fall within the plain language of section 10095(c). Nothing in that statutory text conditions an insurer’s proportional share of FAIR Plan expenses on ultimately absorbing those costs rather than paying them initially. Section 10095(c) regulates the apportionment obligation itself, not the insurer’s subsequent financial decisions or transactions with its policyholders. If the Court accepted that pass-through charges could somehow be incorporated into the terms of section 10095(c), such that section 10095(c) were ambiguous, principles of statutory construction and legislative history still would not dictate a different result. Petitioner does not demonstrate the Court can impose a substantial limit on the Commissioner’s powers authorized under Proposition 103 by inferring an affirmative limitation from an omission that is only apparent by comparison to other policy schemes. Therefore, the Commissioner’s authority to issue the Bulletins, which exists under Proposition 103, does not violate section 10095(c).” 
• Following the L.A. wildfire disaster in January 2025, the FAIR Plan, an insurance safety net that the state requires insurance companies to operate, requested the Commissioner’s approval for $1 billion in additional funds from its member companies. Insurance companies were allowed to pass through some – but not all – of those costs to policyholders.  
• Under Prop. 103, insurance companies applied to the Department, which reviewed and approved the two-year temporary fees. Insurance companies passed the fees to consumers, under the same legal mechanism used to pay costs of intervenors including Consumer Watchdog. The median fee for homeowners was $28 per year. 
  
  Source: CA. Dept. of Ins.