Commissioner Lara Supports Bill Expanding FAIR Plan to Cover Farm Buildings
News: 2021 Press Release
LOS ANGELES, Calif. — Insurance Commissioner Ricardo Lara announced his support for Senate Bill 11, authored by Senator Susan Rubio, that would expand the California FAIR Plan to include farm buildings and other necessary agricultural structures. With wildfire losses continuing to make insurance in the private insurance market harder to find, SB 11 helps farmers, vintners, ranchers, and other agribusiness owners to find the necessary commercial coverage they need to remain in business from the California FAIR Plan, the state’s “insurer of last resort.”
While agricultural businesses can secure federally-backed insurance for their crops and livestock, coverage for barns, storage facilities, workshops for repairs or service, and other similar buildings, can be difficult to find in the admitted insurance market.
“In recent months, I have heard from our farmers, growers, and vintners that insurance companies are non-renewing or refusing to write them commercial insurance,” said Commissioner Lara. “Senate Bill 11 will help close the commercial insurance coverage gaps that are leaving our agribusinesses exposed to major losses. I applaud Senator Rubio for her leadership on this important issue to provide needed support to this vital sector of our state’s economy.”
“I want to thank Insurance Commissioner Ricardo Lara for his support of SB 11. This bill will protect family farms, ranches, growers, and workers. Without insurance, farmers cannot access loans to update equipment or plant their crop, putting the farm at risk of closure."
She added: “In order for California to remain the bread basket of the world, we have to support and protect our farms. Ensuring farmers can access the FAIR Plan for coverage like any other business will do just that.”
“California farmers and ranchers never anticipated a situation where our properties would be uninsurable due to the escalating risk of wildfire,” California Farm Bureau President Jamie Johansson said. “The California Farm Bureau, insurers, the FAIR Plan and Commissioner Lara all recognize the vital importance of insurance so farms can continue to grow food and provide essential jobs. SB 11 by Senator Rubio offers a solution, and we appreciate Commissioner Lara’s support in pursuing this added security for family farmers.”
SB 11 removes the existing statutory exclusion for “farm risks” and replaces it with “commercial agricultural commodities or livestock, or equipment used to cultivate or transport agricultural commodities or livestock.” This clarification means that farmers, ranchers, and vintners will be able to purchase necessary basic property insurance for their real and personal property from the FAIR Plan. These changes are necessary to fulfill one of the core purposes underlying the original establishment of the California FAIR Plan in 1968 – to ensure the availability of basic property insurance in the state to all Californians.
Senate Bill 11 was approved unanimously by the California State Senate in April and is scheduled to be heard by the Assembly Insurance Committee on June 24.
With increasing reports of commercial insurance non-renewals of farms, wineries, and other agricultural businesses, for the first time in the history of the California Department of Insurance, Commissioner Lara in April directed insurance companies to report data on non-renewals and underwriting restrictions focused on the agriculture, farming, and outdoor industry. The results, available later this summer, will highlight the major commercial insurance availability issues affecting agribusiness and provide policymakers with the concrete information needed to confront these challenges to commercial businesses.
While commercial insurance companies providing agricultural insurance coverage have historically suffered minor losses from wildfires, major wildfires since 2017 have contributed to three of the worst-performing years for these companies since the Department of Insurance began tracking data in 1992. Insurance companies paid out more in losses than they earned in premiums in both 2017 and 2020.
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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.