California, September 28, 2025
News Summary
Several major insurance companies, including Mercury and Allstate, have vowed to either stay or resume services in California following newly announced insurance reforms. These reforms broaden the criteria for premium setting, allowing insurers to consider risks associated with catastrophic events and their operating costs. While aimed at enhancing transparency and maintaining Proposition 103 principles, concerns have been raised about potential premium increases, with California Casualty already filing for a 6.9% hike. Governor Newsom highlighted the state’s regulatory structure as key to attracting insurers back to California.
California has seen several major insurance companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, commit to either remaining in or resuming their services in the state. This decision comes after newly announced insurance reforms that have broadened the criteria insurers can consider when setting premiums.
The reforms allow insurance companies to account for factors such as the likelihood of catastrophic events, as well as their own insurance costs, when determining rates. Advocates for consumers, such as Consumer Watchdog, have raised concerns that these changes could lead to easier approval for premium increases from companies. In fact, California Casualty has already filed for a 6.9% premium increase based on the newly implemented reforms.
According to the California Department of Insurance, these reforms will enhance transparency by ensuring consumers are aware of what they are being charged for and who they are making payments to. Meanwhile, the intervenor system, which enables stakeholders to receive fees from consumer payments, has been criticized for lacking updates since its establishment in 2006. Stakeholders have voiced concerns around the transparency and effectiveness of this existing system, originally introduced by former Insurance Commissioner John Garamendi.
The new regulations aim to maintain the principles of Proposition 103, with the California Commissioner stressing that no consumer should pay more than what is legally required. Previously, many insurance companies had withdrawn from California due to rising costs linked to wildfire risks and tightening state regulations.
Governor Gavin Newsom has indicated that the new reforms related to reinsurance helped persuade insurance companies to stay and develop their services in California. He characterized the state as “one of the most affordable insurance markets” because of a regulatory structure that limits rate increases for consumers.
Further enhancing the reform measures is the Sustainable Insurance Strategy introduced by Newsom, allowing for catastrophe modeling that can provide a more accurate assessment of risk, thus aiding in better rate setting. Insurers are now also mandated to provide coverage in high-fire-risk areas where homeowners have traditionally faced challenges in obtaining affordable insurance.
As part of this development, all five companies have requested a 6.9% rate increase, a typical occurrence consistent with previous rate hikes sanctioned by past insurance commissioners. The FAIR Plan, California’s insurer of last resort, has experienced a significant boost, with the number of policies reaching 573,739 as of March 2025. This figure represents a dramatic surge of 23% since September 2024 and an astounding 139% increase since September 2021.
Insurance Commissioner Ricardo Lara is actively seeking to reform the FAIR Plan to ensure it serves as a temporary solution, emphasizing the need for more competitive options for homeowners. Research indicates that homeowner insurance premiums in California could see an upsurge of as much as 21% throughout 2025, with the average premium estimated at $2,930.
Key Features of the Reforms
- Major companies commit to California
- New factors for premium setting
- Transparency enhancements
- Increased FAIR Plan usage
- Projected premium increases
FAQ Section
What insurance companies are resuming services in California?
Several major insurance companies, including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers, have committed to remaining in or resuming services in California.
How do the newly announced insurance reforms affect premium setting?
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.
Have insurance premiums in California increased recently?
California Casualty has already filed for a 6.9% premium increase based on the new reforms.
How is the transparency of consumer payments affected by the new reforms?
The California Department of Insurance states that consumers will now know exactly what they are paying for and who they are paying under the new reforms.
What is the current status of the FAIR Plan in California?
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
What is the projected rise in homeowner insurance premiums?
Researchers estimate homeowner insurance premiums in California could rise by as much as 21% throughout 2025, with an estimated average premium of $2,930.
Deeper Dive: News & Info About This Topic
- ABC7 News
- CBS News
- SJVSUN
- Covered California
- Newsweek
- Wikipedia: Insurance in the United States
- Google Search: California insurance reforms
- Google Scholar: California insurance reforms
- Encyclopedia Britannica: Insurance
- Google News: California insurance reforms
Author: STAFF HERE COSTA MESA WRITER
COSTA MESA STAFF WRITER The COSTA MESA STAFF WRITER represents the experienced team at HERECostaMesa.com, your go-to source for actionable local news and information in Costa Mesa, 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 OC Fair, Concerts in the Park, and Fish Fry. Our coverage extends to key organizations like the Costa Mesa Chamber of Commerce and Boys & Girls Clubs of Central Orange Coast, plus leading businesses in retail, fashion, and technology that power the local economy such as Vans, Experian, and South Coast Plaza. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
