An Agent’s Guide to California FAIR Plan Rate Increases

The California FAIR Plan rate increase change and new commission structure will take effect on October 15, 2026. The approved average dwelling rate increase is 29.1%, while renewal commissions on affected policies will fall from 8% to 3%.

This creates a difficult situation for agents. Your clients can face higher premiums, renewal conversations can get harder, and you can earn much less for servicing the same type of policy. 

Luckily, you can act before the new rules take effect. In this article, we’ll focus on the math behind these changes, give you a 90-day renewal plan, and explain where you can look for alternatives.

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What Changes on October 15, 2026

For a brief summary of what will change on October 15, you can reference the table below.

The new commission structure applies to policy terms effective on or after October 15, 2026. Policies written or renewed before that will keep the current commission structure for that policy term. 

The affected lines include Dwelling Fire, Commercial, Commercial High Value, and Business Owner’s Policy. However, the California Earthquake Authority (CEA) is not affected by this commission change.

Note that the 29.1% dwelling rate increase is a statewide average only, so this does not mean that every policyholder will necessarily receive a 29.1% increase. The actual change will instead depend on the specific property being insured and its rating factors. In higher wildfire-risk areas, the wildfire portion of the premium can increase substantially, including cases where it can even double.

The FAIR Plan originally requested an average 35.8% increase, but the California Department of Insurance approved only 29.1%. Its policy count has also grown sharply as traditional insurers have pulled back from parts of California. 

How the Commission Cut Could Affect Your Book

The California FAIR Plan commission change is easier to understand when you put actual dollars against it. Consider this example:

Take a $3,000 Dwelling Fire policy. At an 8% renewal commission, you currently earn: $3,000 × 8% = $240. Now, apply the average 29.1% premium increase: $3,000 × 1.291 = $3,873. At the new 3% renewal commission, this works out at $3,873 × 3%, or about $116. So, the premium goes up by $873, but your commission falls from $240 to about $116. That’s roughly a 52% drop in dollars earned per renewal!

Now, let’s apply the same example to 100 policies.

• At the old rate: 100 × $240 = $24,000
• At the new rate: 100 × $116 = $11,600

This is approximately $12,400 less in annual renewal commission across the 100 policies. Also, the percentage cut to the commission rate is even larger. Renewal commission falls from 8% to 3%, which is a 62.5% reduction, whereas new business drops from 10% to 7%, which is a 30% reduction.

At the same time, the work does not disappear. You may need to review the risk, explain coverage, handle documents, answer client questions, and manage renewals.

There is also no FAIR Plan broker-fee workaround to make up the difference. California’s broker-fee rules specifically state that a broker fee can’t be charged for services related to procuring coverage from the California FAIR Plan. Therefore, as an agent, all you can control is where you place the policy, which makes market access all the more important.

Your 90-Day Renewal Playbook

You don’t have to wait for October 15 to start. In fact, waiting is likely to make the job harder because carrier access and underwriting review take time. Instead, here’s what you can do as an agent to be prepared.

1. Pull Every FAIR Plan Renewal

Start with every FAIR Plan policy coming up for renewal. Separate the policies that renew before October 15 from those that renew on or after October 15. The second group should receive early attention because the new 3% renewal commission applies to those terms.

Once you have the dates in front of you, you can work through the risks in order instead of reacting one renewal at a time.

2. Search the Admitted Market First

Don’t assume that a home placed on the FAIR Plan last year has to stay there. The FAIR Plan recommends that brokers continue conducting diligent searches for coverage in the voluntary market and place coverage there when it is available.

This is crucial because the California market is changing. Many insurers plan to expand or maintain homeowners business in the state.

3. Look at DIC Coverage When the FAIR Plan Must Stay

Some properties can still require the FAIR Plan for their fire coverage. In those cases, look at a DIC policy California agents can use alongside the FAIR Plan. A Difference in Conditions policy can provide broader protection for risks the FAIR Plan may not cover.

The FAIR Plan often recommends supplemental coverage such as DIC because it provides basic fire coverage rather than a standard homeowners policy.

4. Document Wildfire Mitigation Discounts

If the policy remains on the FAIR Plan, make sure you also review available California FAIR Plan discounts. 

For example, FAIR Plan Dwelling Fire policyholders can qualify for up to 12 mitigation discounts. Dwelling Fire policyholders who obtain all 12 discounts can receive a discount of up to 16.4% off the wildfire portion of the policy premium, while commercial policyholders can receive up to 13.8%.

5. Check Your Carrier Access as Soon as Possible

A quote is only useful if you can actually submit the risk. Before renewal season gets busy, make sure to review your carrier appointments and access. 

6. Talk to the Client Before the Renewal Notice

If the premium is going up, don’t let the renewal notice be the first time your client hears about the change. We recommend starting the conversation early by explaining the new premium, reviewing the coverage, and bringing alternative options when they are available. 

Need more California market options? Before your October renewals, see which insurance carriers in California you can access through First Connect.

Where You Can Place Your Business Instead

Before leaving a home on the FAIR Plan, it’s worth checking admitted carriers, specialty markets, and E&S options. The right market depends on the property, its characteristics, and each carrier’s underwriting rules.

Admitted Carriers Are Re-Entering the California Market

California’s Sustainable Insurance Strategy is pushing insurers to write more business in wildfire-distressed areas. Mercury, CSAA, Travelers, and Farmers have made commitments tied to increased writing in California.

Mercury committed to add more than 38,000 policies over the long term. Its initial commitment covered more than 6,000 policies over two years. CSAA also committed to continued writing and FAIR Plan depopulation. Farmers has pledged to market to at least 300,000 policyholders in wildfire-distressed areas. The company also eliminated its monthly cap on new homeowners business.

Travelers has also joined the strategy and notified the California Department of Insurance that it will expand homeowners availability across the state. These commitments do not mean every property will qualify, though, as your placement will still depend on the carrier’s underwriting rules and the property’s characteristics.

Specialty Carriers Available Through First Connect

For agents searching for homeowners and residential property markets in California, having several options in one place can make the market search simpler. 

For example, you can currently access Aegis, Annex Risk, Delos, LightSpeed, Bamboo, and Obie through the First Connect platform. It also lets agents request access to these markets through the platform, while each carrier reviews the request and makes its own access or appointment decision.

With that said, these carriers cover different types of residential risks, so the right fit depends on the property and the carrier’s underwriting guidelines. This matters quite a lot in California, where wildfire exposure, property characteristics, and other underwriting factors can affect whether a home fits a carrier’s guidelines. 

A Note on Surplus Lines and E&S

Some California properties may still fall outside the admitted market, which makes surplus lines and E&S markets another option to consider. Non-admitted insurance can provide an alternative when admitted carriers decline a risk, subject to the E&S carrier’s underwriting guidelines and California’s diligent-search requirements when applicable.

For agents, an E&S placement can provide another path when a FAIR Plan policy might otherwise be the only available property option. So, always review the policy terms, exclusions, limits, and applicable surplus lines requirements before presenting it to a client, so they understand how the coverage works.

What to Do With the Policies That Stay On the FAIR Plan

If a property remains on the FAIR Plan even after you search the private market, this does not mean the FAIR Plan has to stand alone. Its standard policy provides basic property coverage but does not include liability coverage or protection for certain perils, such as theft. 

When a property needs broader protection, a Difference In Conditions (DIC) policy can work alongside the FAIR Plan and, depending on its terms, provide coverage for losses the FAIR Plan may not always cover, such as water damage, theft, and liability.

Additionally, California agents have various DIC markets to consider. The California Department of Insurance maintains a list of insurers offering DIC coverage in the state, including DB Insurance Co., Ltd. (U.S. Branch), associated with Aegis, and Incline Casualty Company, associated with Bamboo, among others.

For you as an agent, this gives another placement route when a property needs to stay on the FAIR Plan for its fire coverage. You can place the FAIR Plan policy as the underlying layer and then look at a DIC policy to address additional coverage needs. This approach allows the FAIR Plan and DIC policy to work together when the property does not qualify for broader coverage through the private market.

The Clearinghouse: Why Your Appointments Protect Your Book

The California FAIR Plan Clearinghouse gives participating insurers an opportunity to identify eligible FAIR Plan policies and offer coverage in the regular market. The residential clearinghouse receives FAIR Plan policy information each month, excluding customer contact information. California added the commercial clearinghouse on July 1, 2024, under separate legislation.

For agents, the key issue is market access. A carrier may identify a FAIR Plan policy as eligible for an offer through the clearinghouse, but if you do not have access to that carrier, you may not be able to handle the replacement policy when the offer is made. Having appointments or approved access to multiple markets before renewal gives you more options when a policy becomes eligible for a voluntary-market offer.

California is also using depopulation as part of its broader strategy to reduce reliance on the FAIR Plan. The California Department of Insurance says its Sustainable Insurance Strategy is planned to increase insurance availability in areas facing insurance challenges and expand the voluntary market.

AB 69 is a pending piece of legislation that includes provisions concerning brokers’ ownership of expirations and notice of takeout offers. For agents, the practical takeaway is to build market access before the renewal arrives, so you are prepared if a FAIR Plan policy becomes eligible for a replacement offer. 

Expanding Your Reach to Other Markets

Believe it or not, the size of the FAIR Plan has changed the economics of California property insurance. The plan had roughly 696,562 policies in force as of June 2026, with about $768 billion in exposure. This represents a 157% increase in total policies in force since September 2022.

The October 15 commission change is a clear example that the premium goes up, while renewal compensation goes down. You can’t change the FAIR Plan’s commission schedule. However, you can build access to more markets and review each renewal before deciding where the risk belongs.

That’s where First Connect can help. As a digital marketplace for independent agents, First Connect offers you a single platform where you can request access to multiple markets, as they partner with more than 150 carriers and MGAs.

Final Thoughts

The inevitable fact is that your renewals are already moving. So, we recommend starting with the policies coming up after the effective date, running the risks through the admitted market, then looking at specialty, DIC, and E&S options where they fit.

The 2026 California FAIR Plan rate change can affect what your clients pay, while the commission cut changes what you earn on affected policies. 

Remember, you don’t need to move every client off the FAIR Plan. Some homes will remain there because of their location or underwriting profile. What you can do instead is make sure you have looked at the available market before accepting the renewal as the only option.

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