California, September 28, 2025
News Summary
Major insurance companies such as Mercury, CSAA, and Allstate are resuming services in California following new reforms that allow premium adjustments based on factors like natural disaster likelihood. While officials assure better transparency, consumer advocates express concern over potential price hikes. The reforms aim to improve the FAIR Plan’s effectiveness, amid rising insurance policy numbers and projected increases in homeowner premiums.
California is witnessing a significant change in its insurance landscape as several major companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, have committed to remaining in or resuming services in the state. This decision follows newly announced insurance reforms that will allow insurers to consider additional factors when determining premiums, such as the likelihood of natural disasters and their own operational costs, potentially leading to an increase in rates for consumers.
The reforms have drawn criticism from consumer advocacy groups like Consumer Watchdog, who argue that they facilitate easier premium increases for insurance companies. California Casualty has already requested a premium increase of 6.9% in light of the new regulations. The California Department of Insurance assures consumers that these reforms will reveal exactly what they are paying for and the entities receiving their payments.
The existing intervenor system, which has been in place since 2006, has raised concerns regarding its transparency and effectiveness among stakeholders. The reforms aim to address these issues while upholding the principles of Proposition 103, which aims to ensure that no consumer pays more than is legally required for insurance.
Previously, insurance companies had begun withdrawing from California due to escalating wildfire risks and regulatory costs. In response, Governor Gavin Newsom announced reforms related to reinsurance that encouraged companies to continue operating within the state. He described California as “one of the most affordable insurance markets,” crediting a regulatory framework that limits rate hikes.
The newly introduced Sustainable Insurance Strategy allows insurers to utilize catastrophe modeling, enabling them to perform more accurate risk assessments for rate setting. As part of the reforms, insurers are now mandated to provide coverage in high-fire-risk areas, where homeowners had previously faced challenges securing affordable insurance options.
All five companies that have affirmed their commitment to California have collectively requested a 6.9% rate increase, reflecting a trend seen in past approvals of rate hikes by previous insurance commissioners. The California FAIR Plan, the state’s insurer of last resort, has seen a drastic increase in the number of policies, boasting 573,739 active policies as of March 2025. Since September 2024, policies under the FAIR Plan have surged by 23%, and there has been a staggering 139% increase since September 2021.
Insurance Commissioner Ricardo Lara is actively working to reform the FAIR Plan to position it as a temporary solution, ensuring that competitive insurance options remain available to homeowners. Meanwhile, research suggests that homeowner insurance premiums in California could rise by as much as 21% throughout 2025, resulting in an estimated average premium of $2,930.
Key Takeaways from the Insurance Reforms
- Major insurance companies resume their services in California.
- New reforms permit premium adjustments based on additional factors like catastrophe likelihood.
- Consumer advocates are concerned about easier premium increases for insurers.
- California Casualty has already filed for a 6.9% premium increase.
- The fairness of the existing intervenor system is under scrutiny.
- The FAIR Plan policies increase significantly, indicating financial pressure on homeowners.
FAQs
Which insurance companies have agreed to remain in California?
Several major insurance companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, have committed to remaining in or resuming service in California.
What new factors can insurers 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.
What is the FAIR Plan and how is it changing?
The FAIR Plan, California’s insurer of last resort, has increased its number of policies significantly, reaching 573,739 policies as of March 2025. Insurance Commissioner Ricardo Lara seeks to reform the FAIR Plan to ensure it is a temporary solution rather than a permanent option.
What is the predicted trend for homeowner insurance premiums 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.
Key Features of the Insurance Reforms
| Feature | Description |
|---|---|
| New Premium Factors | Insurers can now account for catastrophe likelihood and internal costs when setting premiums. |
| Rate Increases | Companies like California Casualty have already filed for rate increases of 6.9% under the new rules. |
| FAIR Plan Growth | The number of policies in the FAIR Plan has surged, rising by 23% since September 2024. |
| Projected Premium Increase | Homeowner insurance premiums could increase by up to 21% in 2025. |
Deeper Dive: News & Info About This Topic
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Author: STAFF HERE MISSION VIEJO WRITER
MISSION VIEJO STAFF WRITER The MISSION VIEJO STAFF WRITER represents the experienced team at HEREMissionViejo.com, your go-to source for actionable local news and information in Mission Viejo, Orange 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 Oso Fit 5K Fun Run and Community Health Fair, Walk Against Drugs & Community Fair, and National Night Out. Our coverage extends to key organizations like the Mission Viejo Chamber of Commerce and Providence Mission Hospital Mission Viejo, plus leading businesses in retail and education that power the local economy such as The Shops at Mission Viejo, Capistrano Unified School District, and Amazon Delivery Station. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
