Last month, California Insurance Commissioner Ricardo Lara announced that he struck a deal with the insurance industry to encourage home insurers to return to the state’s wildfire-prone hills and canyons. This deal comes after many of the top home insurers in California withdrew from areas of the state where wildfires were most prevalent. According to Lara, home insurers have agreed to the deal in exchange for the loosening of certain insurance regulations in the Golden State.  

Under the new deal, insurers have agreed to return to certain risk zones up to a certain threshold equivalent to 85% of their statewide market share. For example, State Farm’s California home insurance branch, which currently has more than 21% of the market, must now cover 18% of homes in high-risk fire zones. According to the Los Angeles Times, “The net effect will be that major insurers will combine to cover 85% of customers in those areas, with the FAIR plan and other higher-cost insurers picking up the remaining 15%.” 

Currently, the existing system requires home insurers that are looking to increase their average rates across the state to make a request directly to the Department of Insurance. Insurers must also submit numerous supporting documents justifying the reason for the proposed rate increase. Insurers have argued that in addition to these requirements, the current process gives consumer advocates the opportunity to intervene at any point along the way.  

Simply put, the deal will eliminate many of these regulatory requirements, making it easier for insurers to secure higher rate increases more quickly. At this time, leading home insurers in the state have put in pending requests with the Department of Insurance for 28.1%, 30.6% and 39.6% rate increases. 

“It is painfully clear the current system is not working properly,” said Rex Frazier, president of the Personal Insurance Federation of California. “[This deal is] an important first step in stabilizing California’s insurance market.”

While these changes are expected to go into effect by the end of 2024, Lara hopes insurers will begin writing policies again much sooner.  

Kristi W. Dean, Managing Partner

Stone Dean LLP

Kristi is an experienced litigator and transaction attorney who represents clients in business transactions and litigation disputes. Her litigation practice focuses on trade secrets, unfair business competition, insurance law and complex business disputes, with a focus on insurance-related issues. Kristi can be reached at 818-999-2232 or

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