Insurers Resumed New Policy Sales in California
Insurance companies began writing new coverage following regulatory changes that allow for catastrophe modeling and higher rates.
Updated on Oct. 2, 2026 in Insurance
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Since January 2025, insurance companies have resumed issuing new homeowners policies in California after a period of widespread freezes caused by wildfire risks. This shift occurred as part of a state strategy allowing insurers to increase rates and use new catastrophe modeling methods.
Why it matters
The changes seek to stabilize the state's insurance market by encouraging providers to resume coverage in high-risk zones. Regulations now require insurers to commit to increased sales in these areas to qualify for approved rate hikes.
Insurers secured or requested $571 million in rate increases in 2026, a year in which average California home insurance costs rose by 5%. Five of the 10 firms seeking rate hikes committed to writing new policies under the new regulatory framework.
The players
California Insurance Department
This is the state agency responsible for regulating insurance providers and protecting consumer interests in California.
Consumer Watchdog
This non-profit organization advocates for consumer rights and monitors insurance market trends and pricing in California.
Farmers Insurance
This major insurance provider has committed to writing thousands of new policies as part of a state-approved rate adjustment deal.
Mercury Insurance
This insurance company operates within the state and has secured rate increases while committing to expanded coverage for homeowners.
Ricardo Lara
He serves as the California Insurance Commissioner and oversees the implementation of the state's new sustainable insurance strategy.
The details
Companies including Farmers Insurance and Mercury Insurance have secured significant rate increases in exchange for writing new policies. Farmers committed to 5,596 new policies following a $150 million rate increase, while Mercury pledged 2,107 policies after an $85 million increase.
Timeline
September 2022 served as the starting point for measuring FAIR Plan growth.
January 2025 marked the effective date of the state's sustainable insurance strategy.
June 2026 was the reporting period for the 697,000 active FAIR Plan policies.
November 2026 is when California voters will choose a new insurance commissioner.
January 2027 is the scheduled expiration of Commissioner Ricardo Lara's term.
Market Dynamics
The return of new policy issuance follows the adoption of the sustainable insurance strategy, which represents a structural pivot in how the state manages wildfire-related coverage risks. This approach moves away from previous pauses in coverage to a model that integrates catastrophe modeling into standard industry pricing.
Homeowners may see increased availability of private insurance options, though these policies often come with higher premiums approved under the new state framework. Consumers should continue to monitor their rates as the market transitions away from the state-backed FAIR Plan.
The takeaway
The return of private insurers to the California market suggests a stabilization of coverage options for millions of residents. However, shoppers should expect insurance costs to continue reflecting the higher rates allowed under recent regulatory reforms.
Further reading
For more on the current state of the insurance market, visit Insurance.
Source note: This article includes information reported by El Observador.
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