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AB 567

Insurance: residential and commercial.

2025-2026 Regular Session Introduced by Carl DeMaio

AB 567 would have the state pay any annual residential property insurance rate increases above 7% (or the national average), through 2030, if funded.

From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
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Bill Summary · AB 567

AB 567 — Insurance: residential and commercial (DeMaio)

Status: In committee — Set, second hearing; held under submission
Introduced: February 12, 2025

Summary — main purpose

AB 567, titled the "Cap and Cut Cost of Insurance through Reform Act," would (1) limit the growth of residential property insurance premiums for California homeowners by having the State pay certain excess annual rate increases (subject to appropriation), (2) temporarily suspend the gross premiums tax on residential property insurance, and (3) require the Department of Insurance (DOI) to report to the Legislature on regulatory and programmatic reforms aimed at lowering insurance costs and restoring commercial coverage in high-risk areas.

Key provisions

  • State payment of excess rate increases (Insurance Code §2063):
    • Upon an appropriation for that specific purpose, and until January 1, 2030, the State would pay any annual increase in residential property insurance rates approved by the Insurance Commissioner that exceeds whichever is lower: (a) 7% per year; or (b) the annual national average increase in residential insurance premiums.
    • This state payment authority is expressly conditioned on a legislative appropriation.
  • Department of Insurance report (due March 31, 2026):
    • DOI, in consultation with insurers, must report on: (a) regulatory cuts to achieve efficiencies to keep residential rates at or below the national average increase; (b) how to “strategically allocate” $1,000,000,000 per year for four years for fire fuel reduction to reduce fire risk and restore commercial insurance to areas relying on the FAIR Plan; and (c) how to suspend or reform regulations (including CEQA, State Air Resources Board, and California Coastal Commission rules) that limit defensible space or raise brush-management costs.
    • The bill urges the Governor to engage the federal government on a national reinsurance relief program and a federal “reinsurance bridge financing” program.
  • Gross premiums tax change (Revenue & Taxation Code §12221):
    • Temporarily sets the gross premiums tax rate at 0% for premiums received for residential property insurance policies for premiums received on or after January 1, 2026.
    • These tax provisions and the state payment authority are repealed January 1, 2030 (sunset).

Who would be affected

  • Homeowners and residential property policyholders: potential for lower premium growth or reduced out-of-pocket rate increases, subject to appropriation and implementation.
  • Insurers: reduced state gross-premiums tax on residential policies (temporary), potential regulatory relief, and possible federal reinsurance involvement.
  • State budget: potential new expenditures if the Legislature appropriates funds to cover excess rate increases; foregone revenue from the temporary gross premiums tax exemption.
  • Environmental and land-use agencies (CEQA, CARB, Coastal Commission): potential pressure to change or waive certain rules affecting vegetation management and defensible space.
  • Areas relying on the FAIR Plan and commercial insurers: potential efforts to restore commercial coverage through fuel-reduction funding and regulatory changes.

Fiscal and procedural notes

  • The state payment of excess rate increases is explicitly conditioned on appropriation — the bill does not itself appropriate funds.
  • The gross premiums tax reduction would reduce state revenue for the 2026–2029 period unless offset elsewhere.
  • Report deadline: March 31, 2026.
  • Sunset date for the bill’s operative provisions: January 1, 2030.

Legislative status and actions (selected)

  • Introduced Feb 12, 2025; read first time and printed.
  • Referred to Assembly Committees on Insurance and Revenue & Taxation (March 10, 2025); re-referred multiple times.
  • March 21–28, 2025: floor vote (Ayes 46, Noes 17) and re-referrals.
  • April 18 & April 25, 2025: Documents considered by Assembly Revenue & Taxation Committee.
  • April 28, 2025: Set for second hearing; held under submission.

(End of summary)

Compiled from official sources — confirm details with the bill’s official record.

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