MALVERN, PA — California homeowners are increasingly relying on the FAIR Plan and excess-and-surplus insurers as wildfire losses and coverage constraints reshape the state’s insurance market, with those alternatives accounting for about 15% of homeowners premium written in 2025, according to a new Insurance Information Institute report.
The shift has accelerated even though Triple-I said California homeowners premiums remain below the national average. Its members-only State of the State: California Homeowners Insurance report attributes the market pressure to catastrophe losses, regulatory constraints, legal costs, and increasing climate-related risks.
California’s excess-and-surplus, or E&S, market accounted for 7.3% of homeowners direct written premium in 2025, according to the report. That compares with an average 1.1% from 2016 through 2020 and 4.8% from 2021 through 2025.
Reliance on the California FAIR Plan, the state’s insurer of last resort, has also increased. Triple-I reported FAIR Plan exposure of $768 billion as of June 2026, up 250% from 2022, while policy counts climbed 157% from about 270,000 to nearly 700,000.
The California Department of Insurance separately reported 668,609 FAIR Plan homeowner and commercial policies in December in its February 2026 market snapshot.
“California’s insurance challenges are not simply a pricing issue,” Triple-I Chief Executive Officer Sean Kevelighan said. “They reflect a broader imbalance between rapidly growing risks and the ability of insurers to accurately price and manage those risks.”
Insurers also have struggled with underwriting profitability. Triple-I calculated an average combined ratio of 122.6 for California homeowners insurers from 2016 through 2025, meaning claims and expenses exceeded premium revenue over the period. The organization said insurers have paid more than $22 billion in claims stemming from the 2025 Los Angeles wildfires.
California has been changing its insurance regulatory system under Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy. The reforms permit forward-looking wildfire catastrophe models and recognition of certain reinsurance costs in ratemaking while tying their use to commitments by insurers to expand coverage in wildfire-distressed areas.
The California Department of Insurance describes the strategy as an effort to increase coverage availability while maintaining regulatory review of rates. Its February 2026 snapshot reported an average rate-approval time of 336 days for the previous year, including 323 days for filings without third-party intervention and 403 days for intervened filings.
Triple-I’s report used a different measure, citing a median California approval timeline of 225 days compared with a national median of 35 days.
The state’s regulatory changes are intended in part to move policyholders from the FAIR Plan back into the standard insurance market. California regulators have said insurers using catastrophe modeling or reinsurance costs in rate filings must increase coverage in higher-risk areas, while some carriers have begun filing plans to expand coverage under the revised framework.
“Creating a more sustainable market, one in which insurance is affordable as well as available, requires aligning premiums with underlying risk while continuing to invest in mitigation and resilience measures at the community and household level,” Kevelighan said.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.