INSURANCE AGENCY SWARMED : STATE TO CURB ISSUANCE OF HOMEOWNER POLICIES.

Byline: Dawn Yoshitake Daily News Staff Writer

A crush of insurance-hungry homeowners and buyers filled the California FAIR Plan office Thursday, looking to secure one of the few remaining options for new policies before they expire today.

The California Fair Access to Insurance Requirements Plan, a last-resort insurer for many homeowners who can't buy coverage on the open market, will no longer accept new applications throughout most of the state.

State Insurance Commissioner Charles Quackenbush is halting the flow of most new applications to the California FAIR Plan because of worries that the program wouldn't be able to pay claims if another Northridge Earthquake-sized calamity hit the region.

``The plan is dangerously overburdened to the point where these people who do have it may be dragged down if there is a huge catastrophe,'' said Richard Wiebe, a state Insurance Department spokesman.

On Thursday, last-minute insurance consumers faced the task of trying to obtain the policies before it was too late.

``The lobby was so full. We had anywhere from 30 to 40 people at one time, and people were driving in from as far as San Diego to get their application in,'' said Mike Harris, a spokesman for the FAIR Plan.

The office averages 1,100 applications daily, but the volume has increased by at least 50 percent in the past week, he noted.

Without the FAIR option, home buyers who need insurance in order to secure a loan will be scrambling for shrinking alternatives. Meanwhile, thousands of 20th Century policyholders will find themselves in a similar situation when the Woodland Hills-based insurer begins phasing out its homeowners insurance in July. And real estate groups are worried this change in the FAIR Plan will further hammer the region's weak real estate market.

``We're very concerned about insurance availability, given Quackenbush's action to restrict access to the FAIR Plan,'' said Rick Snyder, president of the California Association of Realtors in Los Angeles. ``Before the deadline, it was difficult to get insurance for a home. Starting tomorrow, we expect the situation to become much more difficult.''

The FAIR Plan accounts for about 25 percent of homeowners policies written today, Snyder said.

``We're hoping that it doesn't (affect the real estate market),'' Snyder said. ``But we're concerned that that very real possibility exists.''

Home buyers and homeowners looking to secure a new policy must submit their California FAIR Plan during office hours today.

And note, the FAIR Plan office will not accept applications with today's postmark. Only applications in the office at the time of the deadline - the close of business today - will be processed, said Harris.

Several groups, however, still can buy the California FAIR Plan after today.

Current policyholders will be able to renew their insurance. And home buyers and owners living in brushy, fire-prone areas, along with sections of the state where insurance companies are under-represented, will still be able to buy the coverage, Harris said.

The FAIR Plan still will be offered in San Fernando ZIP Code 91340, Panorama City ZIP Code 91402, North Hollywood ZIP Code 91605 and Pacoima ZIP Code 91331. Brush areas where the FAIR Plan will continue to be offered include Newhall, Valencia, Saugus, Canyon Country and Agua Dulce in the Santa Clarita Valley.

Nevertheless, other options still exist. An estimated 5 percent of licensed insurance companies still are writing new homeowners policies without major restrictions, and insurance can be found through unlicensed insurers called surplus line companies. The policies, however, are sold through state-licensed insurance brokers.

The Department of Insurance offers an information hot line listing surplus-line companies that meet financial stability requirements. The number in Los Angeles County is [phone].

Surplus-line companies traditionally have insured businesses, but now are finding a growing residential market as the California FAIR Plan cuts back on new policies.

The industry's homeowner business grew nearly three-fold to $13.4 million in 1995, compared with the previous year.