Several homeowners insurance companies that had previously scaled back or left California are now returning or committing to stay in the state, according to an announcement Wednesday by Gov. Gavin Newsom and the California Department of Insurance.
The update comes nine months after the department implemented new regulations in response to insurers limiting coverage or exiting the market. Speaking at the Clinton Global Initiative in New York, Newsom described the issue as one of the most pressing global challenges, noting that four admitted market companies had re-entered in recent days.
The California Department of Insurance later confirmed Newsom’s remarks, naming Mercury, CSAA, USAA, Pacific Specialty, and California Casualty as companies pledging to continue or expand coverage in the state. Both Mercury and USAA clarified they had never stopped writing policies in California, but acknowledged adjustments under the new rules.
The revised regulations allow insurers to consider catastrophe risk and reinsurance costs when setting premiums. In return, companies have agreed to increase coverage availability in high-wildfire risk areas. State officials said the strategy is also intended to ease reliance on the California FAIR Plan, the state’s insurer of last resort, which has faced growing financial strain.
“The Sustainable Insurance Strategy helps restore stability and access to California’s homeowners insurance market,” said Mark Pitchford, Chief Operating Officer at California Casualty Group, in a press release.
According to department spokesman Michael Soller, all five insurers have requested rate increases of 6.9%. He emphasized that while the rate hike aligns with past approvals, the companies’ pledge to remain and grow in the state distinguishes the current development.
“This is a far cry from what has happened in the past, when insurance companies increased their rates and dropped policies,” Soller stated, adding that regulators will thoroughly review filings to ensure consumers are not overcharged.
Newsom also acknowledged that the revised rules will allow for more rapid rate adjustments. He called for greater national attention to the issue, pointing out that governors across several states are confronting similar challenges.
Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.