California, September 28, 2025
News Summary
California’s insurance landscape is shifting as major companies like Mercury and Allstate resume services after new reforms were introduced. Adjustments allow insurers to consider various factors for premium setting while consumer advocacy groups voice concerns over potential premium hikes. California Casualty has already requested a 6.9% increase in premiums, and experts anticipate overall rises as high as 21% for homeowners by 2025. The reforms aim to enhance transparency and maintain competitive insurance options amid ongoing wildfire risks.
California has seen a significant development in its insurance landscape, as several major insurance companies have committed to resuming services within the state following the introduction of new reforms. Companies such as Mercury, CSAA, Pacific Specialty, Allstate, and Farmers are now either staying in or returning to the California market, addressing earlier concerns regarding rising risks and costs associated with wildfires, and the stringent state regulations that affected their operations.
The reforms allow insurers to consider new factors when setting premiums, including the likelihood of catastrophes and their own insurance costs. However, these adjustments have drawn criticism from consumer advocacy groups, such as Consumer Watchdog, who argue that they might facilitate easier increases in premiums for the insurance providers.
As a consequence of these reforms, California Casualty has already submitted a request for a 6.9% premium increase, a figure that aligns with requests filed by several other insurance companies in the state. State regulators from the California Department of Insurance explained that consumers will now have greater clarity regarding what they are paying and to whom they are paying under the new guidelines.
Additionally, the existing intervenor system, which enables stakeholders to receive fees from consumer payments, has not seen updates since 2006. Stakeholders have raised issues regarding the transparency and efficiency of this system, originally established in the 1980s by former Insurance Commissioner John Garamendi.
The intent of the recent reforms is to maintain the principles of Proposition 103, ensuring that consumers should not pay more than legally required for their insurance. This comes at a time when the California insurance market has faced turmoil, as companies raised concerns and withdrew operations due to escalating wildfire risks and associated costs.
These reforms are seen as crucial, especially as Governor Gavin Newsom credited reforms related to reinsurance for persuading companies to remain and reinvest in the Californian insurance market. He aptly described California’s insurance market as one of the more affordable options available due to regulations stemming the frequency and magnitude of rate increases.
Moreover, the Sustainable Insurance Strategy introduced by Governor Newsom enables the inclusion of catastrophe modeling for enhanced risk assessment and more accurate rate setting. Insurers are obliged to deliver coverage in high-fire-risk areas, which have been problematic for homeowners searching for reasonably priced insurance options.
Collectively, the five major insurance companies have all requested a 6.9% rate increase, comparable to previous approvals granted by past commissioners. The situation has seen a significant rise in the number of policies in the FAIR Plan, California’s insurer of last resort, which climbed to 573,739 policies as of March 2025. These FAIR Plan policies increased by 23% since September 2024 and surged by 139% from September 2021.
Insurance Commissioner Ricardo Lara is vigorously pursuing reforms for the FAIR Plan to ensure it serves as a temporary measure rather than a permanent solution, with the ultimate aim of providing more competitive insurance choices for homeowners across California.
Research indicates that homeowners in California could see a rise in their insurance premiums by as much as 21% throughout 2025, with the estimated average premium reaching $2,930.
Key Impacts of Recent Reforms
- Insurance companies are allowed to factor in new elements for setting premiums.
- Consumer awareness regarding insurance payments will be enhanced.
- Insurance Commissioner aims for more competitive market options.
FAQ
What major insurance companies are resuming services in California?
Major insurance companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, have committed to remaining in or resuming service in California.
What are the new reforms in California’s insurance policies?
The 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 anticipated average premium increase for homeowners 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.
What is the FAIR Plan in California?
The FAIR Plan is California’s insurer of last resort, providing a safety net for homeowners who cannot find affordable insurance. The number of policies in the FAIR Plan has significantly increased, reaching 573,739 policies as of March 2025.
What percentage increase has California Casualty requested?
California Casualty has filed for a 6.9% premium increase based on the new reforms.
Deeper Dive: News & Info About This Topic
- ABC7 News: Major Insurance Companies Commit to California
- Wikipedia: Insurance in the United States
- FOX40 News: Five Property Insurers Return to California
- Google Search: California Insurance Reforms
- CBS News: California’s 5 Insurance Companies Commitment
- Encyclopedia Britannica: Insurance
- Program Business: California Insurance Commissioner Proposes Rule Changes
- Covered California: Important Changes
- Newsweek: California Proposes Major Home Insurance Reform
- Insurance Insider: CA Insurance Commissioner Lara’s Accountability
- SJVSUN: Five Homeowners Insurance Firms Commit to California
- Google News: California Insurance Market Reforms
Author: STAFF HERE HUNTINGTON BEACH
The Huntington Beach Staff Writer represents the experienced team at HEREHuntingtonBeach.com, your go-to source for actionable local news and information in Huntington Beach, 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 the Huntington Beach Surf City USA Marathon, the U.S. Open of Surfing, Fourth of July celebrations at the Huntington Beach Pier, and community festivals at Huntington Beach Central Park. Our coverage extends to key organizations like the Huntington Beach Chamber of Commerce and Visit Huntington Beach, plus leading businesses in retail, hospitality, and outdoor recreation that drive the local economy. As part of the broader HERE network, including HEREAnaheim.com, HERECostaMesa.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
