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🏘️ '''FAIR plan''' — standing for Fair Access to Insurance Requirements — is a state-mandated [[Definition:Residual market | residual market]] mechanism that provides basic [[Definition:Property insurance | property insurance]] to owners who cannot obtain coverage through the [[Definition:Voluntary market | voluntary market]]. Created in the aftermath of urban civil disturbances in the late 1960s, FAIR plans were originally designed to ensure that properties in high-risk neighborhoods were not systematically denied coverage. Today, they operate in roughly 30 U.S. states and the District of Columbia, and the risk profile they serve has broadened well beyond urban blight to include [[Definition:Wildfire risk | wildfire-prone]], [[Definition:Coastal exposure | coastal]], and other hard-to-place properties.

⚙️ Each state's FAIR plan functions as a shared-market pool. Every [[Definition:Insurance carrier | admitted carrier]] writing property business in the state is required to participate, absorbing a proportional share of the plan's [[Definition:Underwriting | underwriting]] results — both profits and losses — based on its voluntary market share. Applicants typically must demonstrate that they have been unable to secure coverage from at least two or three [[Definition:Admitted insurer | admitted insurers]] before the FAIR plan will issue a policy. The coverage offered tends to be narrower and more expensive than standard market options, often limited to basic perils like fire and vandalism, though some states have expanded their plans to include windstorm or other coverages as market conditions deteriorate.

📈 The relevance of FAIR plans has surged as [[Definition:Climate risk | climate risk]] reshapes the property insurance landscape. In states like California and Louisiana, voluntary carriers have pulled back dramatically from high-risk zones, pushing record numbers of policyholders into FAIR plans and straining the mechanisms' financial capacity. For the broader industry, a swelling FAIR plan signals a market under stress — prompting regulators to revisit [[Definition:Rate adequacy | rate adequacy]], insurers to refine [[Definition:Catastrophe modeling | catastrophe models]], and [[Definition:Insurtech | insurtech]] firms to explore parametric or alternative structures that might absorb some of the displaced demand.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Residual market]]
* [[Definition:Admitted insurer]]
* [[Definition:Property insurance]]
* [[Definition:Involuntary market]]
* [[Definition:Catastrophe modeling]]
* [[Definition:Climate risk]]
{{Div col end}}

Definition:FAIR plan - Revision history

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