California Orders Lenders to Report Handling of Insurance Payouts to Fire Survivors
State officials seek to expedite funds for those rebuilding after the 2025 Los Angeles-area fires, citing numerous complaints about delays.
California officials have ordered mortgage lenders to report on their procedures for handling insurance payouts to survivors of the 2025 Los Angeles-area fires. The directive aims to accelerate the distribution of funds to homeowners needing to rebuild.
The California Business and Consumer Services Agency and the Department of Financial Protection and Innovation (DFPI) issued the order, responding to over 160 complaints received since January 2025 regarding payment delays and other issues. Lenders have been given two weeks to submit their reports.
"It’s unacceptable that after running through a gauntlet of paperwork to file insurance claims, some wildfire survivors still have not gotten access to the funds they need to rebuild," said Rohit Chopra, secretary of the Business and Consumer Services Agency.
The Palisades and Eaton fires in 2025 destroyed more than 16,000 homes and structures in and around Los Angeles, and rebuilding efforts have been slow.
Last July, Governor Gavin Newsom communicated with bankers' associations and credit unions, noting that fire victims reported lenders sometimes held insurance payouts for weeks. He subsequently directed the state to gather data on lenders exceeding a 10-day distribution period for insurance proceeds without a plan to expedite the process. A law signed last year requires banks and credit unions to pay interest on insurance payments they hold.
"The last thing survivors need is unnecessary red tape, delays, and barriers standing between them and the relief they deserve,” Newsom said in a statement Thursday, emphasizing the state's commitment to supporting affected families and business owners.
The state's efforts also occur against a backdrop of persistent questions regarding financial responsibility for California's wildfires. Newsom's administration has previously grappled with the costs associated with fires caused by utility equipment, and a legislative proposal to increase insurers' cost-bearing obligations did not advance in his final legislative session.
DFPI Commissioner KC Mohseni stated that the department will take action, potentially including fines, against financial institutions that unnecessarily delay insurance payouts. "It is critical that as homeowners and families continue to rebuild and recover, lenders do not stand in their way," Mohseni said.