California’s Homeowners Insurance Market Faces Growing Instability Amid Rising Risks — Insurance Information Institute (Triple-I)

Event summary

California’s excess and surplus (E&S) homeowners market share rose from 1.1% (2016-2020) to 7.3% (2025), the highest growth rate among major U.S. markets.
Exposure in California's FAIR Plan hit $768 billion as of June 2026, a 250% increase since 2022, with policy counts growing 157% to nearly 700,000.
Combined, the FAIR Plan and E&S market accounted for 15% of California’s homeowners premium in 2025, leaving only 85% in the standard market.
California homeowners insurers posted an average combined ratio of 122.6 between 2016-2025, driven by catastrophic wildfire losses and underwriting challenges.

The big picture

California’s insurance market is grappling with a structural imbalance between rapidly growing risks and insurers’ ability to price and manage them. The state’s recent reforms, including the Sustainable Insurance Strategy (SIS), aim to modernize catastrophe modeling and reinsurance costs, but approval timelines remain significantly longer than national norms. The shift toward nonstandard insurance options highlights the need for continued market reforms to restore long-term stability and ensure affordable coverage for consumers.

What we're watching

Regulatory Reform: Whether California’s Sustainable Insurance Strategy (SIS) can effectively address the state’s antiquated regulatory environment and align premiums with underlying risk.
Market Stability: The pace at which the E&S and FAIR Plan markets expand, signaling further strain on the standard homeowners insurance market.
Climate Risk: How escalating catastrophe losses and climate-related risks will impact insurers’ ability to manage and price risks accurately in California.