For years, California has faced an insurance crisis that no one could ignore — not homeowners, not insurers, and not state regulators. Skyrocketing premiums, disappearing coverage, and catastrophic wildfires have turned what was once the nation's most robust insurance market into one teetering on the edge of collapse.
But that may finally be changing.
In a recent interview on KTVU's On Your Side, insurance expert Karl Susman broke down the details of Insurance Commissioner Ricardo Lara's Sustainable Insurance Strategy — a sweeping modernization plan designed to stabilize California's insurance landscape and bring major carriers back into the market.
"We've already fallen over the edge," Susman said. "Right now, less than 10% of the insurance market is open for business. This plan is about bringing competition back — because without competition, rates will never come down."
Over the past decade, California's insurance market has been battered by forces on all sides.
The state has endured some of the most expensive wildfire seasons in U.S. history. Between 2017 and 2021, insurers paid out more than $25 billion in claims. Fires like the Camp, Woolsey, and Tubbs wiped out entire neighborhoods, forcing companies to reassess their risk appetite.
California's insurance laws, particularly Proposition 103 (1988), restrict how insurers calculate and file rates. Carriers must base their prices on historical loss data, not forward-looking risk models. In a world where climate change has rendered the past unreliable, this rule makes it nearly impossible for insurers to price accurately.
State Farm, Allstate, and others have paused or reduced new policies, citing the inability to keep up with reinsurance costs and wildfire risks. As they pulled out, the California FAIR Plan — a last-resort fire insurance pool — ballooned to record levels, now covering hundreds of thousands of homes.
"We have no competition," Susman explained. "When you can't shop around for a better rate, the few companies left can charge whatever they need to stay solvent."
Commissioner Ricardo Lara's Sustainable Insurance Strategy aims to correct this imbalance by making Ca ...
