Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates the business of insurance in the state. Existing law establishes the California FAIR Plan Association, a joint reinsurance association in which all insurers licensed to write basic property insurance participate to administer a program for the equitable apportionment of basic property insurance for persons who are unable to obtain that coverage through normal channels. Existing regulations authorize insurers, in distressed areas and for properties insured by the FAIR Plan that are exposed to wildfire risk, to use catastrophe modeling, as specified. Under existing regulations, a distressed area includes undermarketed ZIP Codes and distressed counties.

For purposes of using catastrophe modeling in insurer commitments, this bill would state that a distressed area includes only undermarketed ZIP Codes. The bill would provide that an undermarketed ZIP Code is a ZIP Code, as determined by the commissioner, that, among other things, has at least 10% of the sum of residential properties in the ZIP Code that are insured by the FAIR Plan, as specified. The bill would require the department to review and revise any regulations as necessary to implement these provisions.