California’s Insurance Crisis Needs a New Foundation | Opinion
Summary
California’s insurance market faces challenges because its rules are based on laws from 1988, which don’t match today’s risks like wildfires. The state is starting to use better data and risk-based pricing to help insurers offer more coverage, but many homeowners and businesses still struggle to get insurance. This problem affects local economies and requires regulatory changes and transparency about legal issues.Key Facts
- California’s insurance rules are still mostly based on Proposition 103, a law from 1988.
- As of June 2026, nearly 700,000 homeowner and commercial insurance policies were in the FAIR Plan, a safety net for hard-to-insure risks.
- The state Department of Insurance is using better catastrophe data and risk-based pricing to improve the market.
- Twelve homeowner insurance companies are expanding coverage in California in 2026, compared to none in 2025.
- Difficulty getting insurance can make it harder for homeowners to get mortgages and businesses to operate or expand.
- Legal issues, like third-party litigation funding and attorney advertising, drive up insurance costs.
- Some states have laws requiring more transparency in litigation funding; California may need similar rules.
- Independent insurance agencies help customers understand complex insurance options and protect them from market problems.
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