California's insurance market has been under pressure for years, but in early 2024, a surprising headline broke through the political noise: Governor Gavin Newsom is fast-tracking reform.
During a budget press conference that mostly focused on fiscal policy, Newsom made unexpected — and encouraging — remarks about California's homeowners insurance crisis. His comments, later analyzed by insurance expert Karl Susman on The Insurance Hour, signaled a shift from cautious observation to direct executive action.
For millions of homeowners struggling with canceled policies, rate increases, and FAIR Plan enrollment, this could be the most significant turning point in decades.
California's home insurance market has been deteriorating since the mid-2010s, when back-to-back wildfire seasons produced record-breaking losses. By 2023, most major carriers — including State Farm, Allstate, and Farmers — had either paused new business or withdrawn from high-risk zones entirely.
That left thousands of homeowners scrambling for coverage under the California FAIR Plan, the state's insurer of last resort.
But as Susman noted, the FAIR Plan was never meant to be a permanent solution. "It's a safety net," he explained. "And when a safety net becomes the whole system, you have a crisis."
The Department of Insurance and Commissioner Ricardo Lara have been working since 2023 on a framework to stabilize the market — the Sustainable Insurance Strategy — but progress has been slow. Newsom's announcement effectively puts the effort on a fast track.
Governor Newsom's comments were unusually direct for an issue often buried in bureaucracy. In his own words:
"We did an executive order about a year ago, and we're trying to reconcile 30 years where there hasn't been much reform in this space. We're mindful of voter-approved constraints. We're mindful of the burdens placed on our FAIR Plan. But we need to stabilize this market. We need to send the right signals. We need to move."
The reference to voter-approved constraints points directly to Proposition 103, the 1988 law that requires insurance companies to seek prior approval for rate increases and limits the use of forward-looking catastrophe modeling.
Under Prop 103, insurers must base rates on historical losses, not predicted risks — a formula that made sense in the 1980s but no longer aligns with California's climate realities.
As wildfires grow larger and reinsurance costs soar, carriers argue that outdated rules make it mathematically impossible to stay solvent.
Newsom seems to agree — and he's no longer willing to wait for incremental change.
Perhaps the most significant piece of Newsom's announcement was his commitment to accelerate the regulatory timeline.
"We've got to move this process along," he said. "We can't wait until December. We're promoting a 60-day process of review. It should not take this long for emergency regulations."
That single line — "60-day process" — caught the attention of industry analysts.
It means the state could approve key portions of the Sustainable Insurance Strategy in a matter of weeks, not months. The governor also suggested the reforms would be introduced as a trailer bill, legislation attached to the annual budget that allows urgent measures to pass more quickly.
"I'm almost tempted to do another executive order," Newsom admitted, "but under the circumstances, I think working with the legislature on a trailer bill is more appropriate."
For insurers and regulators who have spent years navigating California's slow-moving approval process, that's a seismic shift.
Newsom also made it clear that this is a team effort — not a power grab.
"I know our insurance commissioner; we're in constant contact," he said. "His team is working their tails off. I know how concerned the legislature is on this… but we've just got to do more."
In other words, the governor isn't replacing the Department of Insurance — he's reinforcing it. His comments recognized Lara's Sustainable Insurance Strategy as the foundation, while calling for faster implementation and broader legislative backing.
For context, the Department's plan includes:
Allowing insurers to use catastrophe modeling to project future wildfire risks.
Enabling reinsurance cost recovery in rate filings.
Expanding FAIR Plan modernization, including multi-peril coverage and online platforms.
Requiring insurers to write in high-risk areas in proportion to their statewide market share.
These reforms aim to bring insurers back into the market while protecting consumers from excessive pricing. Newsom's timeline — "60 days" — adds the missing ingredient: urgency.
As Karl Susman observed, the announcement came "buried in a budget speech, but not buried in importance."
While most coverage of the press conference focused on fiscal items, the insurance remarks sent a clear message to homeowners and industry leaders alike: the governor is aware, engaged, and willing to act.
"For the first time in a long time," Susman said, "we're seeing top-level acknowledgement that this is not a regulatory quirk — it's a systemic problem."
That acknowledgement matters. For months, insurers have been warning that without modernization, the system would collapse under its own weight. At the same time, consumer groups have accused regulators of caving to industry demands.
By reframing the issue as a shared emergency, Newsom created political space for cooperation rather than confrontation.
Still, the challenge remains: how to move fast without sacrificing oversight.
Newsom emphasized his awareness of "deep mindfulness" — his term for balancing industry needs with voter protections.
"We've been meeting with everybody on this," he said. "Strong opinions about time to decision-making on resolving open-ended questions around reinsurance, guaranteeing insurance within the WUI, guaranteeing that people come back into the market… all of the above."
His reassurance that the trailer bill would be crafted "with deep mindfulness of Prop 103 and consumer concerns" was aimed at preempting criticism from groups like Consumer Watchdog, whose founder Harvey Rosenfield has publicly opposed modernization efforts.
The message: reform doesn't mean deregulation — it means functionality.
For homeowners, especially those in wildfire-prone areas, this could mark the beginning of real relief.
If successful, the 60-day process would accelerate the introduction of catastrophe modeling, allowing insurers to write policies that reflect actual risk mitigation — things like fire-resistant roofing, brush clearance, and community-level prevention.
That means:
More availability: Private carriers could re-enter markets currently dominated by the FAIR Plan.
More fairness: Homeowners who invest in mitigation could see lower premiums.
More stability: Faster rate reviews could reduce sudden non-renewals.
As Susman explained, "The reforms aren't about giving insurers what they want. They're about giving homeowners what they need — stability, predictability, and access to coverage."
Newsom's tone — urgent, almost impatient — reflected a rare alignment between political will and public demand.
"We share the same goal," he said. "But we need to do more. And we need to do it faster."
That sense of momentum is exactly what the market has been missing.
California's insurance crisis didn't happen overnight — and it won't be fixed overnight — but for the first time, the governor's office, the legislature, and the Department of Insurance appear to be moving in the same direction.
The trailer bill, if enacted, could serve as a national model for balancing consumer protection with actuarial reality — a blueprint for other states struggling with climate-driven insurance instability.
For years, California's insurance market has been defined by gridlock — between regulators and carriers, between cost and coverage, between politics and practicality.
Governor Newsom's remarks may finally signal a path forward.
By combining speed with oversight and policy with pragmatism, the state is acknowledging what both homeowners and insurers have known for years: that reform is not optional — it's overdue.
As Karl Susman concluded in his analysis:
"This isn't about politics. It's about math. And if the math finally starts to work again, homeowners across California will breathe a little easier."
