California's insurance market is in crisis. From wildfire-exposed homeowners unable to find coverage to major carriers pausing new policies, the Golden State has spent the last several years grappling with an insurance ecosystem on the verge of collapse. Yet amid this turmoil, a new path forward is taking shape — one that promises to bring insurers back, increase competition, and protect consumers.
It's called the California Insurance Stability Plan (or "Sustainable Insurance Strategy"), and if it works as intended, it could reshape not just California's insurance system but become a model for the nation.
For more than 35 years, California's insurance system has been governed by Proposition 103, a 1988 ballot initiative designed to protect consumers from excessive rate increases. The law gave the Department of Insurance sweeping power to approve or reject rate changes — a safeguard in its day, but one that now acts like a chokehold on a modern insurance industry.
Because of Prop 103's rigid structure, insurers can't quickly adjust prices to reflect real-world risks, such as catastrophic wildfires, flood exposure, or rising reinsurance costs. Even simple underwriting changes — like offering a new discount for a safer roof type — can take months or years to approve. As Susman put it, "In California, you can't really shop for property insurance — you can only hunt for it."
The result? Insurers flee the state, refusing to write new business or limiting coverage so severely that homeowners are left with a single option: the state-run California FAIR Plan.
The FAIR Plan was designed as a safety net — a "market of last resort" for homeowners who truly couldn't get insurance elsewhere. It provides bare-bones fire coverage, not the comprehensive protection a standard policy offers.
But in today's market, FAIR Plan enrollment has exploded. Consumers aren't turning to it because their homes are uninsurable; they're turning to it because no private insurer will take them. Susman notes that this is backwards: "It's supposed to be where you go when you absolutely have no other choice — not where half the state ends up by default."
The Sustainable Insurance Strategy aims to reverse that trend — to "depopulate" the FAIR Plan by re-energizing the private market.
The first pillar of the new plan is straightforward: transition homeowners and businesses out of the FAIR Plan and back into private insurance.
That means:
