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FAIR Plan Ordered To Cease & Desist Fire Insurance Moratorium

SACRAMENTO, CA -- Dec. 14, 2018 -- The California FAIR Plan agreed to lift its moratorium on writing new policies following a cease and desist order by the California Department of Insurance.

California Insurance Commissioner Dave Jones on Thursday issued a cease and desist order requiring the California FAIR Plan to terminate immediately the moratorium it initiated on writing new fire insurance coverage in wildfire-impacted areas and ordering the FAIR Plan to make its fire insurance products available to all eligible Californians in keeping with its statutorily mandated purpose.

“It is customary for insurers to issue temporary moratoriums on writing new policies in areas experiencing active natural disasters or other conflagrations,” IIABCal General Counsel Steve Young said.  “The rhetorical flourish of the Commissioner’s press release notwithstanding, the FAIR Plan did nothing wrong here, as evidenced by its voluntary decision to lift the moratorium.”

"I originally took this action after receiving information that the FAIR Plan imposed a moratorium on writing new policies in current active fire zones across California," Jones said. "The FAIR Plan was established as the fire insurer of last resort to make certain California property owners have access to fire insurance coverage.

"There is no statutory allowance for the FAIR Plan to discontinue writing fire insurance policies for applicants anywhere in the state who need fire insurance coverage to protect themselves from financial loss," the commissioner said. "While the FAIR Plan is required to write coverage, any individuals or entities who attempt to commit insurance fraud by placing FAIR Plan or any other insurance coverage on damaged property to cover losses that already occurred will be investigated and prosecuted."

CDI said that, if anyone is denied the opportunity to purchase a FAIR plan policy, they should contact the CDI consumer hotline at 800-927-4357.