California, September 28, 2025
News Summary
Major insurance companies, including Allstate and Farmers, are staying in California amid new insurance reforms that may increase premiums. The changes allow insurers to consider new factors such as catastrophe likelihood when setting rates. Consumer advocates express concerns over potential premium hikes, with California Casualty already requesting a 6.9% increase. The reforms also aim to bring clarity for consumers regarding pricing, as policies in the FAIR Plan surge, indicating a rising reliance on last-resort insurance options. Projections suggest homeowner insurance premiums might rise by 21% over the next two years.
California
Several major insurance companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, have committed to remaining in or resuming service in California following newly implemented insurance reforms. However, these changes may lead to an increase in premiums for consumers.
The reforms allow insurers to consider new factors when setting premiums, including the likelihood of catastrophes and their own insurance costs. Consumer advocacy groups, such as Consumer Watchdog, have expressed concerns that these reforms facilitate easier premium increases for companies. For instance, California Casualty has already filed for a 6.9% premium increase based on the new regulations.
The California Department of Insurance has indicated that consumers will now have greater clarity regarding what they are paying for and who they are paying under the new framework. The department also noted that the intervenor system, which enables stakeholders to receive fees paid by consumers, has not been updated since 2006.
Stakeholders have raised concerns about the transparency and efficiency of the existing intervenor system, which was established by former Insurance Commissioner John Garamendi. The reforms also aim to uphold the spirit of Proposition 103, with assurance that no consumer should pay more than is legally required.
California’s insurance market has faced challenges, particularly in the wake of rising wildfire risks, escalating costs, and stringent state regulations. Many insurance companies had withdrawn from the market due to these issues. Governor Gavin Newsom announced that reforms addressing reinsurance were instrumental in persuading companies to remain and grow their operations in California.
Governor Newsom described California as “one of the most affordable insurance markets” thanks to a regulatory framework that limits rate increases. The Sustainable Insurance Strategy, introduced by Newsom, allows for catastrophe modeling to achieve more accurate risk assessment and rate setting.
Insurance companies are now mandated to provide coverage in high-fire-risk areas, where homeowners previously struggled to secure affordable insurance. All five companies have similarly requested the 6.9% rate increase, which aligns with previous occurrences of rate hikes that past insurance commissioners have approved.
The number of policies in the FAIR Plan, California’s insurer of last resort, has increased significantly, reaching 573,739 policies as of March 2025. FAIR Plan policies have surged by 23% since September 2024 and increased by 139% since September 2021. In response to the growing reliance on the FAIR Plan, Insurance Commissioner Ricardo Lara aims to reform it to ensure it serves as a temporary measure rather than a permanent option, with the goal of providing more competitive choices for homeowners.
Research suggests that homeowner insurance premiums in California could rise by as much as 21% throughout 2025, with an estimated average premium reaching $2,930.
Key Features of Insurance Reform in California
| Feature | Description |
|---|---|
| Companies Involved | Mercury, CSAA, Pacific Specialty, Allstate, Farmers |
| New Premium Factor | Catastrophe likelihood and individual insurance costs |
| Initial Premium Increase Request | 6.9% by California Casualty |
| FAIR Plan Policies | 573,739 policies as of March 2025 |
| Projected Average Premium | $2,930 |
FAQ
1. Which insurance companies are staying 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 are the new factors insurers can consider for 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 has California Casualty filed for a premium increase?
California Casualty has already filed for a 6.9% premium increase based on the new reforms.
4. What is the FAIR Plan and how many policies does it have now?
The FAIR Plan is California’s insurer of last resort and has increased significantly, reaching 573,739 policies as of March 2025.
5. How much could homeowner insurance premiums rise in California?
Researchers estimate homeowner insurance premiums in California could rise by as much as 21% throughout 2025, with an estimated average premium of $2,930.
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Author: STAFF HERE CORONADO
The Coronado Staff Writer represents the experienced team at HERECoronado.com, your go-to source for actionable local news and information in Coronado, 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 the Coronado Island Film Festival, productions at Lamb’s Players Theatre, community workshops at John D. Spreckels Center, and iconic celebrations at Hotel del Coronado. Our coverage extends to key organizations like the Coronado Chamber of Commerce and Visit Coronado, plus leading businesses in hospitality, dining, and tourism that drive the local economy. As part of the broader HERE network, including HERESanDiego.com, HEREHuntingtonBeach.com, HERELongBeach.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
