SB 1209 (Allen) Penalizes Insurers for Not Correcting Identified Business Problems

SACRAMENTO – California’s Department of Insurance (CDI), and policyholders across the state, will soon benefit from stronger enforcement tools that will require insurers to correct business practices that are harming consumers.

CDI conducts routine “market conduct examinations” to evaluate insurers’ market practices and to verify they are operating safely, fairly, and in compliance with state laws and regulations. The exams often identify deficiencies within the insurer’s business practices and suggest corrective actions designed to protect consumers and the financial health of the insurer to minimize risk.

However, some insurers may intentionally delay or decline to implement these corrective actions. CDI conducted an examination of the FAIR Plan in 2025 following many filed complaints from policyholders in the wake of the LA Fires. The Department found the FAIR Plan implemented less than half of the recommended actions following their 2022 Examination Report, leading to the continued and avoidable harm of their policyholders.

SB 1209 will correct this by authorizing the Department to levy fines against insurers which do not fix the issues identified in exam reports within a specified timeframe. Penalties may go as high as $20,000 per violation and will be decided through a formal hearing process.

“We’re starting to provide real accountability,” said Senator Ben Allen (D-Pacific Palisades). “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 new law will take effect on January 1, 2027.