IIABCal Response to FAIR Plan Commission Cuts

IIABCal is critical of the decision the California FAIR Plan announced today – with no advance notice to IIABCal – to slash broker commissions, effective Oct. 15, on new business from 10% to 7%, and on renewal business from 8% to 3%.  The implication that brokers are to blame and/or be punished for FAIR Plan overpopulation is insulting and inaccurate.   As you know, brokers submit new and renewal applications to the FAIR Plan solely because they have no better—or any—alternatives. 

In a bulletin issued Aug. 18, the Plan announced that “Policies written or renewed before the October 15, 2026, effective date of the new rates will earn commissions at current new business (10%) and renewal (8%) percentages.  Policies written or renewed on or after the October 15, 2026, effective date will earn commissions at restructured new business (7%) and renewal (3%) percentages based on the increased policy premium rates.” 

The FAIR Plan broker agreement permits unilateral commission changes, so there is no legal opportunity to challenge the action, and no politically viable channel for reversing it at this time. 

Brokers need to remember that California law (Section 2189.3, California Code of Regulations) prohibits producers from adding fees to FAIR Plan or California Automobile Assigned Risk Plan (CAARP) policies. 

In other FAIR Plan news, IIABCal has been working extensively on pending legislation—AB 69—designed to promote depopulation of policies from the Plan, while at the same time recognizing and providing protection to brokers’ ownership of expirations. 

In its current form, AB 69 would allow the Plan to provide insurers, starting 1/1/28, with sufficient policyholder information to enable them to directly offer alternative coverages outside the Plan. However, IIABCal fought to have language added to the bill to  require such insurers contemporaneously notify the broker-of-record of any such offer, and to encourage consumers to contact their broker for more information. 

Please visit iiabcal.org for all advocacy news.