Newsom issues order to stabilize home insurance market

California Gov. Gavin Newsom has signed an executive order directing state agencies to stabilize the volatile insurance market and find new ways how California can respond to catastrophes. 

The executive order calls for multiple agencies and departments to collaborate on research and recommendations to develop tools to mitigate the costs of recovering from natural disasters, to stabilize the insurance market and utility sector, to make insurance more affordable and accessible and to protect ratepayers and ensure compensation for wildfire survivors. 

State of play: Newsom’s order comes as California has been grappling with home insurers leaving the state. 

• But California received some good news last week in regards to home insurers when five homeowners insurance companies revealed they are committing to staying or returning to California for the long-term after receiving certain insurance reforms. The insurers are Mercury Insurance, CSAA, USAA, Pacific Specialty and California Casualty. 
• Those companies will now provide coverage in parts of California more prone to wildfires, although they will have new factors to consider when setting their rates. 

The big picture: Newsom has directed state agencies to develop new recommendations for handling natural catastrophes by January 2026. 

• It calls for the Department of Insurance to collaborate with CAL FIRE and the California Public Utilities Commission and other agencies to provide recommendations to the Wildfire Fund Administrator. The administrator will issue a report by April 1, 2026, under Senate Bill 254, to analyze new approaches to respond to catastrophes, including wildfires. 

What they’re saying: There’s no Republican or Democrat thermometer – red and blue states alike, and countries around the world, are facing this climate-fueled insurance crisis. And California is taking action,” Newsom said. “Already, we’ve seen positive action to stabilize our home insurance market as insurers submit plans to write policies in areas where Californians have been running out of options. We’re taking a whole-of-government response to protect Californians from wildfire while boosting coverage options and bringing down costs.” 

• Insurance Commissioner Ricardo Lara said Newsom’s order allows the state to enhance its preparedness, response and recovery efforts to ultimately improve the long-term availability of insurance. 
• “Our shared goal is to ensure that every Californian has peace of mind, knowing they can recover and rebuild after a disaster, regardless of their ZIP Code or income level,” Lara said. “With the Governor’s ongoing support, my Department will carefully review insurance companies’ rate filings to ensure consumers are not overcharged by any insurance company or intervenor. I will continue to hold all insurance companies accountable for their obligations to wildfire survivors.”