AB-2724 • 2026

Catastrophe modeling: distressed areas.

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Bauer-Kahan
Last action: 2026-04-22
Official status: From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 16. Noes 0.) (April 22). Re-referred to Com. on APPR.
Effective date: Not listed

Plain English Breakdown

The official source material does not provide specific details on penalties for non-compliance or consequences if a ZIP Code is no longer considered undermarketed.

Catastrophe Modeling for Distressed Areas

This law changes how insurance companies use catastrophe modeling by focusing on undermarketed ZIP Codes with high wildfire risk and low insurance coverage.

What This Bill Does

Defines a distressed area as only undermarketed ZIP Codes, not including distressed counties.
Requires the Insurance Commissioner to determine if at least 10% of residential properties in a ZIP Code are insured by the FAIR Plan to be considered undermarketed.
Needs the Department of Insurance to review and update regulations for using catastrophe modeling every year starting July 1, 2027.
Requires the department to hold public meetings yearly where people can suggest distressed areas.
Makes the department publish a list of ZIP Codes in distressed areas on its website by January 1, 2028.

Who It Names or Affects

Insurance companies that write basic property insurance
People living in undermarketed ZIP Codes with high wildfire risk

Terms To Know

Catastrophe modeling: A tool used by insurance companies to predict the cost of damage from disasters like wildfires.
FAIR Plan: A program that provides basic property insurance for people who can't get it through regular channels.

Limits and Unknowns

The bill does not specify what happens if a ZIP Code is no longer considered undermarketed.
It's unclear how the public meetings will influence the department’s decisions on distressed areas.
There are no details about penalties for insurance companies that do not follow these rules.

Bill History

2026-04-22 California Legislative Information
From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 16. Noes 0.) (April 22). Re-referred to Com. on APPR.
2026-04-20 California Legislative Information
Re-referred to Com. on INS.
2026-04-16 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on INS. Read second time and amended.
2026-03-16 California Legislative Information
Referred to Com. on INS.
2026-02-21 California Legislative Information
From printer. May be heard in committee March 23.
2026-02-20 California Legislative Information
Read first time. To print.

Official Summary Text

AB 2724, as amended, Bauer-Kahan.
Catastrophe modeling: distressed areas.
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.
This bill, on or before July 1, 2027, and yearly thereafter, would require the department to review and update distressed areas. As part of the review and update, the bill would require the department, among other things, to hold at least one public meeting to allow interested persons to submit suggestions for distressed areas, as specified. The bill, on or before January 1, 2028, and yearly thereafter, would require the department to
publish a bulletin with a list of ZIP Codes in distressed areas on its internet website and to provide this information to certain committees in the Legislature.

Current Bill Text

Read the full stored bill text

Download Bill PDF