Bulletin 2026-10: CFPA Direct Premiums and Premium Tax

RICARDO LARA CALIFORNIA INSURANCE COMMISSIONER

BULLETIN 2026-10 TO: All Admitted Property & Casualty Insurers and Other Interested Parties

FROM: Laura Clements Deputy Commissioner, Financial Surveillance Branch

DATE: November 6, 2026

RE: California FAIR Plan Association, Member Company Participation, and Insurance (Premium) Tax Obligation

The California FAIR Plan Association (“FAIR Plan”) was established by statute in 1968 as California’s insurance safety net. Every property insurance company licensed in California automatically becomes a FAIR Plan member as a condition of doing business in California and may be called upon to help fund the FAIR Plan’s continued operation in response to extreme climate change-intensified catastrophes such as last year’s devastating Los Angeles wildfires.

California Insurance Code (“CIC”) Section 10094 states that each insurer, as a condition of its authority to transact certain kinds of insurance in this state, shall participate in the FAIR Plan, an industry placement facility program.

Pursuant to CIC Section 10095, subdivisions (a)-(c), the FAIR Plan shall have a Plan of Operation whereby all member insurance companies participate in the writings, expenses, profits, and losses of the FAIR Plan.

Pursuant to California State Constitution Article XIII, Section 28, each insurer shall be subject to an Insurance (Premium) tax that is, in turn, ultimately remitted to the state’s General Fund. Pursuant to CIC Section 10094, for Insurance (Premium) tax reporting, each insurer is responsible for annually reporting its share of the FAIR Plan direct premium writings utilizing the Participation Rates as provided by the FAIR Plan.

Every year upon filing the Insurance (Premium) Tax Return with the California Department of Insurance (Department), the insurer must include its share of the FAIR Plan’s direct premium written as its taxable direct premiums. The Department will conduct audits of tax returns to ensure fair reporting of premiums and tax.

In budget year 2024-25, Insurance (Premium) Tax collected and deposited to the state’s General Fund were $4,343,206,000 while, in budget year 2023-24 Insurance (Premium) Tax collected were $3,958,513,000.

References: Cal. Ins. Code Section 10094; Cal. Ins. Code Section 10094.2; Cal. Ins. Code Section 10095; Cal. Ins. Code Section 10100.2. Bulletin 2026-10 Page 2 of 2 November 6,2026 Please see the FAIR Plan Insurance (Premium) Tax Instructions found on the Tax Forms, Instructions, and Information page at https://www.insurance.ca.gov/0250-insurers/0300- insurers/0100-applications/tax-forms-instruct-and-info/.

Inquiries regarding this Bulletin may be directed to: [email protected].