CFRW Capitol Update January 3, 2024

California Federation of Republican Women
Officially Chartered by the National Federation of Republican Women
and the California Republican Party

From the Desk of Lydia Kanno, CFRW President
Submitted by Jeanne Solnordal, CFRW Legislative Analyst
January 3, 2024



Why Are So Many Californians Getting Dropped?

a blank jigsaw puzzle with a red piece that says "insurance"

Home insurance companies say they can no longer afford to do business in California due to spiking disaster claims — and some have stopped taking applications and have announced they are exiting the California insurance market completely. Reform California says the root cause is costly regulations imposed by state politicians.  

Danielle Chao – Reform California

Do you own a home or are you looking to buy one in California? If you do, be prepared for severe rate increases and canceled policies.

California’s liberal politicians are making it financially impossible for insurance companies to continue to offer coverage in the state. In many areas, the cost of insurance has gone up by a factor of ten in the state in recent years — and it could get even worse.

State Farm is expected to increase its average rate for homeowner insurance policies in California by 20% next year, under a proposal approved last week by the Department of Insurance. (Sacramento Bee)

Many companies are pulling out of California. The most recent move is by smaller insurers. Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company, and Kemper Independence Insurance Company plan to non-renew policies.

Carl DeMaio, founder of Reform California, points to costly mandates and regulations being imposed on insurance providers in California that no other state requires. Demaio states that “every new rule or mandate simply increases the cost of insurance to consumers.”

Similar remarks were made by Steve Young, an attorney with Independent Insurance Agents & Brokers of California. Young claims “that the state’s regulatory framework has made it difficult for insurance companies to do business in California.” California has a very complex rating system, and it is challenging for insurers to confidently obtain the required rating from an actuarial standpoint.

Bad policies have increased the risk of losses in California that insurance companies must cover. 

“Skyrocketing crime rates lead to greater property losses – and insurance rates for small businesses have spiked as a result,” DeMaio notes.

Then there are natural disasters. After the fires of 2017 and 2018, the number of Californians who were cut from their home insurance plans jumped 42% due to disaster claims that eliminated insurance companies’ reserves. 

Despite the insurance hikes, California has failed to enact common-sense wildland fire and flood prevention policies.

DeMaio points to recent news about California’s goat herders as an example. Many state and local entities have employed goat herders for the animals to graze on brush that could pose a fire threat. However, a new California labor law could require that these herders receive a raise from $4,000 to over $14,000 per month — making the service unaffordable, putting the herders out of work entirely, and leaving dangerous fire-prone brushes to grow.

DeMaio raises the concern that driving private insurance companies out of California could be the goal of the state’s liberal politicians in charge in Sacramento.

“California state government actually has a government insurance program called the FAIR program and they see the exit of private insurance companies as a good thing to help them gain revenue and market share for their government-managed policies,” DeMaio says.

“The problem with government-managed insurance programs is it costs much more, provides much less coverage, and is an absolute nightmare to get your claims approved,” DeMaio warns.

DeMaio says the only way to stop this impending insurance crisis and prevent rate hikes is to elect the right politicians that will reject rate increases and vote for common sense policies that promote proper preventative measures for disasters.



In a significant move to protect California consumers and address the pressing challenges posed by climate change, Insurance Commissioner Ricardo Lara has unveiled the state’s Sustainable Insurance Strategy. This ambitious strategy is aimed at safeguarding the overall health of the insurance market, comprised of consumers, homeowners, and business owners, while ensuring long-term sustainability.

California’s Sustainable Insurance Strategy represents a proactive and comprehensive approach to safeguarding the interests of Californians in the face of climate change challenges. By taking these decisive actions, Commissioner Lara and Governor Gavin Newsom aim to foster a sustainable insurance market that will benefit consumers and businesses across the state, ensuring a safer and more secure future for all. 

California’s Sustainability Insurance Strategy Plan:


Gavin Newsom

WHAT TO KNOW: The executive order urges Insurance Commissioner Lara to take swift action to address issues with the insurance market and expand coverage options for consumers, while maintaining strong consumer protections and keeping plans affordable.

SACRAMENTO – As climate change continues threatening our communities with more extreme wildfires, floods and droughts, state insurance markets throughout the country have faced significant disruption. Governor Gavin Newsom is urging Insurance Commissioner Ricardo Lara to take action to stabilize and improve California’s property insurance marketplace.

Some companies have already announced they will stop issuing new policies in California. Others are limiting policy renewals. We can expect more of this to come in the short term. That is why it is critical for the Insurance Commissioner to act quickly to help stabilize the state’s marketplace, while maintaining consumer protections and fair rates.

What Governor Newsom said: “This is yet another example of how climate change is directly threatening our communities and livelihoods. It is critical that California’s insurance market works to protect homes and businesses in every corner of our state. A balanced approach that will help maintain fair prices and protections for Californians is essential. I look forward to continuing to work with Commissioner Lara and others to strengthen our marketplace and protect Californians.”

A copy of the executive order can be found here.

This executive order requests that the Commissioner of Insurance take swift regulatory action to strengthen and stabilize California’s marketplace, with the following goals:

  • EXPAND CHOICES, STABILIZE MARKET. Expand coverage choices for consumers, particularly in underserved areas of the state. Maintain the long-term availability of homeowners and commercial property insurance coverage.
  • BETTER RATE APPROVAL PROCESS. Improve the efficiency, speed, and transparency of the rate approval process. Tailor the rate approval process to account for all factors necessary to promote a robust, competitive insurance marketplace.
  • STRONGER FAIR PLAN. Maintain the solvency of the FAIR Plan to protect its policyholders and promote long-term resiliency in the face of climate change, including by identifying mechanisms to reduce its share of the overall market in underserved areas and move its customers into the admitted insurance market.
  • ACCELERATE IMPLEMENTATION. Direct the Department of Finance to consult with the California Department of Insurance to support the rulemaking process and help accelerate implementation of potential regulations.