The California Department of Insurance will be able to fine insurers that don’t correct business practices flagged in state examinations under a new law by state Sen. Ben Allen, D-Pacific Palisades.
The department conducts routine market conduct examinations of insurers. These exams check whether companies operate safely, fairly and in compliance with state laws and regulations. They often identify deficiencies and recommend corrective actions to protect consumers and insurers’ financial health.
Some insurers, however, may intentionally delay or decline to make those corrections. In 2025, the department examined the FAIR Plan after many policyholders filed complaints in the wake of the Los Angeles fires. The department found the FAIR Plan had implemented fewer than half of the actions recommended in its 2022 examination report, leading to continued and avoidable harm to policyholders.
SB 1209 authorizes the department to fine insurers that don’t fix identified issues within a specified timeframe. Penalties may reach $20,000 per violation and will be decided through a formal hearing process.
“We’re starting to provide real accountability,” Allen said. “When illegal or harmful business practices are identified, we expect them to be fixed in a timely manner to protect consumers. I’m grateful for the bipartisan support this received throughout the process, and for Governor Newsom’s signature that will better ensure policyholders are sufficiently cared for when disaster strikes.”
The law takes effect Jan. 1, 2027. The bill text is available at leginfo.legislature.ca.gov.
Edited by SMDP Staff