Keep me updated!
For nearly five years, California’s homeowners have faced an unprecedented insurance drought. Wildfires, soaring reinsurance costs, and outdated regulations forced major carriers to pause new business, cancel renewals, or exit the market entirely.
Now, for the first time in years, there’s a cautious glimmer of hope. Farmers Insurance, California’s second-largest home insurer, has announced that it will expand the number of new policies it writes each month — a move experts say could mark the beginning of a slow but meaningful recovery in the state’s strained insurance marketplace.
Farmers’ Comeback: A Small Step With Big Implications
As of this month, Farmers Insurance is increasing its monthly cap on new homeowner policies from 7,000 to 9,000 — a modest increase of 2,000 policies, but one that carries symbolic weight.
The move comes as the company cites an “improving insurance marketplace” in California, following months of negotiations and incremental reforms by the state’s Department of Insurance (CDI) under Commissioner Ricardo Lara.
In addition to homeowners policies, Farmers will now also begin selling:
- Condo insurance for both owner-occupied and rented units
- Renters insurance
- Additional personal lines products over the coming months as conditions allow
For a state where millions of homeowners have struggled to find coverage, even a limited reopening is a meaningful signal.
Experts React: Relief, Skepticism, and Reality Checks
The announcement sparked immediate reactions across the insurance and consumer advocacy communities.
Amy Bach, Executive Director of United Policyholders, called the move “a modest step in the right direction.”
Michael Stoller, Deputy Director at the California Department of Insurance, was more optimistic, stating that it is “a sign that in many ways the dam is starting to break here for California’s insurance crisis.”
Consumer Watchdog Executive Director Carmen Balber urged caution, warning that insurers have been granted significant regulatory concessions and now must deliver real access to coverage in return.
Independent agent and Insurance Hour host Karl Susman offered a balanced perspective:
“When the market starts to move, it’s good for everybody.”
His comments reflect the mood among many brokers who have watched capacity vanish for years — even incremental progress restores confidence.
What’s Changing Behind the Scenes
Farmers’ decision follows months of regulatory negotiations and proposed reforms introduced by Commissioner Lara in late 2024. These reforms aim to modernize California’s rigid rate approval framework and allow insurers to:
- Use forward-looking catastrophe models
- Include reinsurance costs in rate filings
- Expand policy availability in exchange for regulatory flexibility
Lara described the approach as a “give-and-get” system. Insurers receive updated actuarial tools, and in return must expand coverage availability statewide.
Under the proposal, insurers would no longer be able to accept regulatory benefits without increasing access for consumers in high-risk regions.
The Catch: Reforms Are Not Fully Implemented Yet
Despite the optimism, consumer advocates stress that the reforms are not yet fully in effect. Most changes remain in review, and no insurer has yet filed rates under the new framework.
As Karl Susman explained:
“This is really a good-faith gesture they’re showing — saying, ‘We’re behind this. We understand the environment is changing, and we can start competing again in California.’”
Farmers’ expansion is based more on anticipation than on finalized regulatory change.
Why This Matters for Homeowners
For California homeowners, this shift could mean:
- Improved availability as pressure on the California FAIR Plan begins to ease
- Renewed competition that may eventually help stabilize pricing
- More coverage options for condo owners and renters who have had few choices
However, supply still lags far behind demand, and premiums will continue to reflect wildfire risk, rising rebuilding costs, and global reinsurance pressures.
Immediate relief should not be expected.
Keep me updated!
The Bigger Picture: A Market in Slow Recovery
For years, the narrative has been one of retreat. Insurers restricted underwriting, FAIR Plan enrollment surged past sustainable levels, and consumers were left with limited options.
Farmers’ re-entry tests whether California’s new regulatory direction can truly reverse that trend. If the CDI follows through on modernization promises, more insurers may follow.
But accountability remains critical. As Balber noted, regulators have delivered many of the tools insurers requested — now industry participation must follow.
Regulation vs. Risk: A Delicate Balancing Act
Proposition 103 was designed to protect consumers from unfair rate hikes, but it has also limited insurers’ ability to price for today’s catastrophic wildfire risk.
The CDI’s updated strategy attempts to modernize without abandoning consumer protections. By tying rate flexibility directly to expanded availability, regulators hope to rebuild trust and equilibrium.
If successful, it could mark the most meaningful insurance reform in decades.
What Homeowners Should Expect Next
In the near term:
- Additional insurers may announce limited re-entry
- CDI regulations will continue through public comment and legal review in 2025
- FAIR Plan enrollment may stabilize or slowly decline
Longer term:
- Broader coverage options could slowly return
- Rates may become more realistic and predictable
- Competition could gradually return to distressed regions
The goal is not rapid growth — but sustainable recovery.
What Homeowners Should Do Now
Experts continue to advise:
- Stay informed on insurer and CDI updates
- Work with independent brokers who can access multiple markets
- Review your rebuilding limits annually
- Maintain documentation and mitigation records
- Be patient, but proactive
The market is moving — but slowly.
Final Thoughts: A Flicker of Optimism
Farmers’ decision to expand new policies does not signal the end of California’s insurance crisis — but it does represent the first real step forward in years.
For a long time, the story has been one-way traffic: retreat, restriction, and cancellation. Now, cautiously, the direction may finally be shifting.
As Karl Susman summed it up:
“When the market starts to move, it’s good for everybody.”
If this momentum holds, California may at last be entering the earliest phase of a long-awaited insurance recovery.
Keep me updated!
