California home insurance market shows signs of stabilization

California’s home insurance market is showing signs of stabilization following the implementation of Insurance Commissioner Ricardo Lara’s ‘Sustainable Insurance Strategy’. The new regulations allow insurers to utilize forward-looking catastrophe modeling and factor in reinsurance costs when setting rates, a move intended to increase policy availability in high-risk wildfire areas.

While the state Insurance Department views the return of new policies as a success, advocacy group Consumer Watchdog has released an estimate of 12,189 new policy commitments since January 2025. The group argues this figure is low, noting that insurers have requested or secured $571 million in rate increases under the new rules. The Insurance Department has disputed these findings, calling the group’s analysis ‘incomplete and premature’ and stating it will release its own data.

The market faces future uncertainty as Commissioner Lara approaches the end of his term. The upcoming election for his successor could impact the continuity of these policies. Leading candidates include former San Francisco Supervisor Jane Kim, who advocates for socializing portions of the market, and former Senator Ben Allen.