California Governor Gavin Newsom sent a letter to financial industry associations, including California’s Credit Unions, regarding the disbursement of insurance proceeds held in escrow for survivors of the Eaton and Palisades fires.

In addition to the governor’s letter, the California league has received inquiries from media outlets regarding this issue, highlighting the increased public attention surrounding the release of insurance proceeds during the rebuilding process.

While the state acknowledges that holding insurance funds in escrow is standard during rebuilding, the governor raised concerns about operational delays in releasing these funds.

The administration has directed the California Department of Financial Protection and Innovation (DFPI) to collect consumer complaints regarding delayed access to rebuilding funds, warning that prolonged timelines will be scrutinized under consumer protection laws.

• The DFPI is tasked with monitoring and collecting consumer complaints regarding insurance escrow management.
• California’s Credit Unions recommends reviewing mortgage servicing and escrow disbursement workflows for affected members to help ensure draws are processed efficiently as construction milestones are met.
• The governor’s office is also warning insurance carriers not to use the California Department of Forestry and Fire Protection’s (CAL FIRE) Damage Inspection (DINS) database to delay or deny claims.

The California league has been in communication with the governor’s office regarding this directive and will provide updates as the DFPI outlines further guidance. Please reach out to Robert Wilson with any questions.

You can read the governor’s full news release here.