California, September 28, 2025
News Summary
California’s insurance landscape is improving as major companies like Mercury and Allstate plan to remain in the state amid new reforms. These reforms allow insurers to assess premiums based on catastrophe likelihood, which has raised concerns over potential premium increases. California Casualty has already filed for a 6.9% increase, and consumers are promised greater clarity on their costs. The number of policies under the FAIR Plan has surged, highlighting ongoing market challenges with projections indicating a potential rise in premiums by 21% in 2025.
California has seen a positive shift in its insurance landscape as several major insurance companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, have committed to staying in or resuming services in the state. This decision comes alongside the announcement of new insurance reforms that will allow insurers to consider additional factors when setting premiums, particularly the likelihood of catastrophic events and their own insurance costs. However, this reform also raises concerns, leading advocates to argue that it makes it easier for companies to increase premiums substantially.
Among the companies taking action following the reforms, California Casualty has already filed for a 6.9% premium increase, setting a potential precedent for others in the industry. The California Department of Insurance has commented that these reforms will give consumers greater clarity regarding what they are paying for and who they are paying.
The reforms address concerns regarding the transparency and efficiency of the existing intervenor system, which has not been updated since 2006. Stakeholders have expressed worries that the longstanding system, established by former Insurance Commissioner John Garamendi, lacks adaptability to current needs.
Background Context
The impetus for these reforms lies in the challenges California has faced recently, particularly with rising wildfire risks, which have led to insurance companies withdrawing from the market due to escalating costs and complex state regulations. Governor Gavin Newsom has highlighted that reforms related to reinsurance were crucial in persuading companies to not only stay in California but to expand their services.
Newsom described California as “one of the most affordable insurance markets” thanks to a regulatory environment that regulates rate increases. The newly introduced Sustainable Insurance Strategy allows insurers to use catastrophe modeling for a more precise assessment of risks and subsequent rate-setting.
Furthermore, insurers are now mandated to provide coverage even in high-fire-risk areas, which have historically presented challenges for homeowners seeking affordable insurance options. All five major companies have requested a 6.9% rate increase, reflecting trends from previous years where similar hikes were approved by earlier insurance commissioners.
In response to the insurance companies’ retreat, the number of policies under the FAIR Plan, California’s insurer of last resort, has surged to 573,739 policies as of March 2025. This figure represents a significant increase of 23% since September 2024 and a staggering 139% since September 2021. Insurance Commissioner Ricardo Lara is advocating for reforms to the FAIR Plan to ensure it serves as a temporary solution rather than a long-term option, aiming to provide homeowners with more competitive insurance choices.
Researchers project that homeowner insurance premiums in California could rise by as much as 21% throughout 2025, with an estimated average premium reaching $2,930.
Key Points
- Major insurance companies commit to services in California.
- New reforms allow insurers to consider catastrophe likelihood in premium setting.
- 6.9% premium increase already filed by California Casualty.
- Consumers will gain transparency on insurance costs.
- FAIR Plan policies increase significantly, highlighting market challenges.
- Insurance premiums expected to rise overall in California.
FAQ
1. Which insurance companies are remaining in or resuming service in California?
Several major insurance companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, have committed to remaining in or resuming service in California.
2. What do the new reforms allow insurers to consider when setting premiums?
Newly announced insurance reforms allow insurers to consider new factors when setting premiums, such as the likelihood of a catastrophe and their own insurance costs.
3. How much of a premium increase has California Casualty filed for?
California Casualty has already filed for a 6.9% premium increase based on the new reforms.
4. What is the current status of the intervenor system?
The intervenor system, which allows stakeholders to receive fees paid by consumers, hasn’t been updated since 2006, according to the California Department of Insurance.
5. What potential rise in premiums are researchers predicting for California homeowners?
Researchers estimate homeowner insurance premiums in California could rise by as much as 21% throughout 2025, with an estimated average premium of $2,930.
Key Features
| Feature | Details |
|---|---|
| Insurance Companies Resuming Service | Mercury, CSAA, Pacific Specialty, Allstate, Farmers |
| New Reform Factor Consideration | Likelihood of catastrophe, own insurance costs |
| Initial Premium Increase Filed | 6.9% by California Casualty |
| Estimated Premium Increase | Up to 21% in 2025 |
| FAIR Plan Policies Count | 573,739 as of March 2025 |
Deeper Dive: News & Info About This Topic
- ABC7 News
- Wikipedia: Insurance in California
- Fox40 News
- Google Search: Insurance Reforms California
- CBS News
- Google Scholar: Insurance Reforms California
- Program Business
- Encyclopedia Britannica: Insurance
- Covered California
- Google News: California Insurance News
- Newsweek
Author: STAFF HERE SAN DIEGO WRITER
SAN DIEGO STAFF WRITER The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
