Governor Gavin Newsom has stepped into California’s escalating homeowners insurance crisis with an executive order directing state agencies to accelerate work on solutions for the market. The order calls on the Department of Insurance, among other agencies, to develop strategies that not only address the volatility of the insurance industry but also examine how California can better mitigate damage from natural disasters.
The Governor framed the move as a way to “speed up the work” that was already mandated by new legislation requiring a comprehensive natural catastrophe report by April 2026. By doing so, Newsom is signaling that this problem is too urgent to wait for long-term studies alone.
Insurance Commissioner Ricardo Lara then quickly responded to the Governor’s executive action with strong support. In his statement, Lara described the situation as requiring a broad-based response, saying that it “demands a whole-of-government approach.” He highlighted that the Department of Insurance is not standing alone but is committed to coordinating with CAL FIRE, the Office of Emergency Services, and other state agencies to integrate wildfire and disaster resilience into the insurance system. This reflects Lara’s longstanding emphasis on what he calls a Sustainable Insurance Strategy, designed to rebuild trust with consumers while ensuring that carriers remain in the California market.
Lara highlighted that progress is already being made with key carriers. He pointed out that “five major insurers have pledged to stay and grow in California,” naming Mercury, CSAA, USAA, Pacific Specialty, and California Casualty as companies that have agreed to expand coverage rather than pull back.
I note that each of those insurers only sought the typical 6.9% insurance rate increase, which is an automatic approval in today’s wildfire climate. These are small compared to State Farm’s emergency rate request discussed in A Critical Look at the California State Farm Rate Ruling: A Stabilizing Act or a Regulatory Surrender.
For California policyholders who have been struggling with non-renewals and skyrocketing premiums, these commitments are significant. Lara framed these developments as proof that the regulatory strategy is working, while making clear that the department will continue to “scrutinize rate filings, hold insurers accountable to wildfire survivors, and demand transparency in how companies operate.”
The Commissioner also tied Newsom’s executive order back to Senate Bill 254, authored by Senator Josh Becker, which requires state agencies to deliver a comprehensive report on California’s natural catastrophe risks and insurance markets by April 1, 2026. He said the order would allow the Department of Insurance and its partners to “hit the ground running” and avoid the risk of bureaucratic delays. By aligning the order with legislative mandates, Lara is emphasizing that the state’s insurance market recovery is both a legal requirement and a moral obligation to policyholders, and it will take effort to make these resiliency requirements a reality.
It appears to me that Newsom and Lara are presenting a unified front in what has become one of the state’s most pressing economic and social issues. The Governor is lending political urgency to a crisis that affects millions of homeowners, while the Commissioner is outlining concrete steps to stabilize the market and protect consumers. Their partnership signals that California’s leadership is intent on tackling the insurance problem head-on, recognizing that natural disaster risk is not going away and neither can affordable, reliable insurance coverage.
The Governor’s Order also highlighted Proposition 103 as the first point addressed in the Order:
[I]n 1988, California voters enacted Proposition 103, which established a robust set of consumer protections designed to keep insurance rates fair and affordable and to ensure a competitive marketplace;
This is the California law. The problem is how to keep insurance affordable after repeated catastrophic wildfires causing historic losses and ensure a competitive marketplace for insurers. At least, Newsome and Lara are not kicking the problem down the road for the next set of leaders.
Thought For The Day
“We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.”
—John Kennedy