A panel of insurance and risk professionals convened in Sacramento last week to discuss the state of California’s homeowners insurance market.
The event, hosted by the Center for California Real Estate (CCRE), focused on issues related to insurance availability, pricing and long-term risk mitigation.
Panelists included Michael Wara, director of Stanford University’s Climate and Energy Policy program; David Russell, director of CSU Northridge’s Center for Risk Management and Insurance; John Norwood, lobbyist for the Independent Insurance Agents and Brokers of California; Emily Rogan, senior program officer at United Policyholders; and Sanjay Wagle, senior vice president of governmental affairs at the California Association of Realtors (CAR).
Wara said insurance premiums in California are likely to keep rising for the next 10 to 20 years. He and other panelists emphasized that stabilizing the market depends not only on pricing adjustments but also on broader risk-reduction efforts.
Russell said the primary concern is restoring capital to the market to expand access to insurance. He noted that increased premiums will likely affect both high- and low-risk areas. “We have a cost sharing issue,” he said, referencing the need for cross-subsidization across risk zones.
Rising construction costs were also cited as a factor contributing to insurance pressures. Norwood noted that labor shortages in certain regions are further complicating rebuilding efforts, which can affect insurer exposure.
Norwood also raised concerns about the growing reliance on the California FAIR Plan, the state’s insurance program of last resort. He described the plan as overextended and noted that recent wildfire losses have led to billion-dollar assessments.
“The FAIR Plan has ballooned to half a million or more policies,” he said, adding that moving policyholders off the FAIR Plan and into the private market will be key to improving the overall insurance landscape.
Meanwhile, Rogan urged homeowners to reassess their policy limits, noting that underinsurance remains a widespread issue.
“Altadena families underinsured by millions are losing generational wealth,” she said, recommending purchasing additional replacement cost coverage when possible.
The panelists also agreed that insurance cannot be the sole strategy for addressing wildfire risk. Wara noted the importance of physical risk reduction, such as home hardening and vegetation management.
“We cannot insure our way out of this problem,” Wara said.
Norwood also added that current regulations require insurers to offer discounts for risk mitigation but these are difficult to implement unless rates reflect actual risk levels. He said achieving rate adequacy would allow carriers to properly recognize property-level improvements.
The panel underscored that addressing California’s insurance challenges will require coordinated efforts across insurance, real estate and public policy sectors.