Navigating California's Insurance Crisis: Hard Choices and Survival Strategies

California's insurance market continues to stand at a crossroads — where rising risk, outdated regulation, and climate change collide. For homeowners and businesses alike, finding affordable, reliable coverage is no longer a given; it's a challenge that requires strategy, persistence, and adaptability.

In this Insurance Hour segment, host Karl Susman explored the tough realities of California's ongoing insurance crisis — from the hard choices homeowners are forced to make, to the strategies that can help them weather an increasingly unpredictable market. What emerges is a candid look at the tension between affordability and availability — and the steps consumers, agents, and regulators can take to stabilize the system before it fractures further.

The Current Landscape: A Crisis of Confidence

California's insurance ecosystem, once the envy of the nation, is now defined by uncertainty. Homeowners are facing non-renewals, skyrocketing premiums, and fewer choices. Major carriers like State Farm, Allstate, and Farmers have dramatically reduced new business in the state, citing regulatory gridlock and unmanageable risk exposure.

According to Susman, the situation didn't happen overnight — it's the product of decades of misalignment between regulation and reality.

"We're dealing with 21st-century risks under a 1980s regulatory model," he said. "The math doesn't work anymore."

Wildfire exposure, inflation in construction costs, and global reinsurance pressures have all converged to make California one of the most expensive and complicated markets for insurers. Yet, as Susman pointed out, the state's approval process for rate adjustments — governed by Proposition 103 — still operates at a pace that lags far behind economic conditions.

"Imagine trying to adjust prices in real time when it takes 9 to 12 months just to get a rate filing approved," he explained. "By the time the approval comes through, the numbers are already outdated."

This delay, combined with restrictions on using forward-looking catastrophe models, has left insurers unable to price accurately — forcing them to retreat from the very communities that need them most.

The Rise of the FAIR Plan: A Safety Net Under Strain

The exodus of insurers has driven record numbers of Californians into the FAIR Plan, the state's insurer of last resort. Originally designed to offer basic fire coverage for properties that couldn't find protection elsewhere, the FAIR Plan has become a lifeline for over 400,000 policyholders, representing more than $390 billion in insured va ...

California's FAIR Plan Faces a Financial Stress Test: What Homeowners Need to Know

California's home insurance system is once again under strain — and this time, the warning signs are flashing from its last line of defense: the California FAIR Plan.

Once intended as a temporary safety net for homeowners unable to find private coverage, the FAIR Plan has ballooned into a primary insurer for hundreds of thousands of Californians. Its explosive growth is now raising urgent questions about solvency, consumer protection, and the long-term sustainability of the state's entire insurance framework.

In a recent To The Point segment on ABC10, host Becca Habegger broke down the escalating crisis and spoke with insurance expert Karl Susman about what the Department of Insurance's latest announcement really means for homeowners, insurers, and California's financial stability.

The FAIR Plan: A Safety Net Stretched to Its Limits

The California FAIR Plan Association, created in 1968 after riots and urban fires left many properties uninsurable, is not a state-funded program — despite its official-sounding name. Instead, it's a pool of private insurers required by law to participate, collectively providing basic fire insurance to property owners who can't obtain coverage on the open market.

For decades, the FAIR Plan remained relatively small. But as climate-driven disasters and regulatory challenges forced carriers to withdraw from wildfire-prone regions, the FAIR Plan's enrollment surged.

The numbers tell a stark story:

• In 2019, roughly 155,000 homeowners were covered by the FAIR Plan.

• By mid-2024, that figure exceeded 408,000 — a 160% increase in just five years.

• The plan's total exposure — the value of the properties it insures — skyrocketed from $50 billion in 2018 to nearly $393 billion in 2024.

That means the FAIR Plan is now carrying eight times more financial risk than it did just a few years ago, without a proportional increase in its financial reserves.

The Numbers Behind the Risk

At a recent California Assembly Insurance Committee hearing, FAIR Plan President Victoria Roach offered a rare glimpse into the plan's balance sheet.

Navigating California's Insurance Crisis: Proposition 103 and the Road Ahead

California's insurance market is at a breaking point. Premiums are rising, carriers are withdrawing, and homeowners are increasingly being forced onto the California FAIR Plan — the insurer of last resort that was never designed to be a first line of defense.

For many Californians, it feels like the system meant to protect them is collapsing. But how did we get here? And more importantly, what can be done to restore balance to the marketplace?

In a recent episode of Insurance Hour, insurance expert Karl Susman offered a deep dive into the roots of the state's crisis — tracing it back to Proposition 103, the regulatory reform passed in 1988, and exploring how the Sustainable Insurance Strategy, introduced by Insurance Commissioner Ricardo Lara, could reshape the future of coverage in California.

The Birth of Proposition 103: Reform with Unintended Consequences

To understand California's current crisis, it's important to revisit the origins of Proposition 103.

When voters approved the measure in 1988, it was hailed as a victory for consumers. The state was in an uproar over high auto insurance rates, and the initiative promised sweeping reforms that would hold insurance companies accountable.

The law mandated an immediate 20% rate rollback, meaning insurers were required to reduce their rates to 1987 levels. It also gave the California Department of Insurance (CDI) the authority to approve or deny any future rate increases.

At the time, the goal was clear: rein in insurers' pricing power and make premiums more affordable. But the measure also imposed strict limits on how insurers could calculate risk. Instead of allowing actuarial discretion, Proposition 103 required that rates be based primarily on:

1. The driver's safety record

2. The number of miles driven annually

3. The number of years licensed

These factors made sense for auto insurance in 1988 — but as Susman explained, "they also stripped insurers of the ability to use data and models that reflected true risk exposure."

That regulatory rigidity, he argues, has echoed across all lines of insurance — including property — for more than 35 years.

From Auto Reform to Property Market Collapse

While Proposition 103 was originally aimed at auto insurance, its framework soon shaped the entire California insurance landscape.

As climate change accelerated, wildfires grew larger and more destructive. Floods, earthquakes, and atmospheric storms became more frequent. Yet insurers were still ...

Rethinking Insurance Inspections: Karl Susman's Call for Transparency, Technology, and Consumer Trust

The insurance industry stands at a technological crossroads. New tools—satellite imaging, drones, AI-powered risk modeling, and digital self-inspections—have the potential to revolutionize how insurers evaluate properties. Yet, instead of ushering in a golden era of efficiency and transparency, many consumers today feel blindsided, frustrated, and even violated by how these innovations are being used.

That tension took center stage at the Summer 2024 National Council of Insurance Legislators (NCOIL) Meeting, where insurance expert, agency owner, and radio host Karl Susman delivered candid remarks about the state of inspections, consumer perception, and the urgent need for clear regulatory guidelines.

Susman's insights offered an unfiltered look at what's happening "on the ground"—from the everyday frustrations of homeowners to the systemic communication breakdowns between carriers, regulators, and agents. His message was simple but powerful: technology isn't the enemy—poor rollout and lack of transparency are.

Inspections Aren't New—But the Process Has Changed

Susman began by grounding the discussion in history. Inspections, he reminded the audience, have always been part of insurance underwriting.

"When an insurance company is insuring a property, they're going to look at the property. That's just part of the process," he said.

Decades ago, inspections were often handled by agents themselves. Susman recalled walking around homes with a "little wheelie thing," measuring perimeters by hand.

"Consumers didn't love it," he admitted. "But at least they knew who was coming to their house and why."

As insurers grew larger and more centralized, those tasks shifted to in-house staff and later to third-party vendors. Each step added a layer of distance between the insurer and the policyholder—and with that, a growing sense of mistrust.

"When the insurance company started sending their own people, consumers didn't like that either. They figured, 'This guy's on the insurance company's payroll; he's going to look for every little thing.' So the industry pivoted again and started hiring third-party inspectors."

The result? Sometimes, chaos.

Susman shared stories of inspectors showing up unannounced, sending cryptic text messages, or being chased off properties by homeowners with firearms.

"It's definitely a difficult job for inspectors," he said, "but it's also invasive for consumers. You've got strangers showing up with no clear explanation of who they are or what they're doing. It's not a good experience for anyone."

The Rise (and Fall) of Self-Inspections

To fix those problems, some carriers introduced self-inspections—letting homeowners use their smartphones to take photos ...

Behind the Scenes with a Claims Adjuster: What Really Happens After You File an Auto Insurance Claim

When a car accident happens, the moments that follow are often chaotic. Between dealing with damage, injuries, and stress, few people stop to think about what happens next — once they make that call to their insurance company.

In a recent episode of Insurance Hour, host Karl Susman pulled back the curtain on one of the most misunderstood parts of the insurance world: the claims process. Joined by former claims adjuster Rachel Goldman, the two explored how adjusters make tough calls, why some claims take longer than others, and what really determines who's "at fault."

Their discussion provided a rare look inside a system that most people only encounter during moments of crisis. What emerged was both surprising and deeply human — a world driven by deadlines, judgment calls, and, yes, the occasional angry phone call.

What Does a Claims Adjuster Actually Do?

"Spell it out for us like we're stupid," Susman joked early in the show. "What does a claims adjuster do?"

Goldman didn't hesitate:

"We get information about what happened in an accident — or if there's damage to your car — and we figure out who's at fault. Then we resolve the claim and pay the right parties based on the coverage."

It sounds simple enough, but the job is anything but. Adjusters are investigators, negotiators, customer service reps, and financial gatekeepers rolled into one. They handle everything from gathering statements and reviewing evidence to coordinating with body shops, medical providers, and sometimes attorneys.

Goldman spent ten years managing auto claims — the most common type of insurance claim in the country. Her work required balancing empathy with efficiency, often while juggling 40 to 100 active cases at any given time.

The Hidden Pressure Behind Every Claim

Few policyholders realize just how much a single adjuster handles.

"There were times where I would have anywhere from 50 to 100 pending claims," Goldman recalled. "It's very challenging to handle them effectively, especially when you're waiting on people to call you back, schedule inspections, or get statements."

Each case involves multiple moving parts — and every delay can cause frustration on all sides. Adjusters face pressure from both their employers (to resolve claims quickly) and customers (who want fast payouts and empathy).

That balancing act takes discipline. Goldman described using paper calendars, handwritten notes, and early computer systems to stay organized — long before modern automation tools made the process easier.

But even now, the heart of claims work hasn't changed: it's still about people, judgment, and timing.

The Myth of the "Evil Adjuster"

Your Top Insurance Questions Answered: Fire Safety, Non-Renewals, and CAT Models

Insights from Karl Susman and Insurance Hour

California's homeowners are facing one of the most volatile insurance markets in decades. Premiums are rising, insurers are pausing new business, and terms like non-renewal, CAT models, and FAIR Plan have become part of everyday conversations. But what do they really mean—and what can policyholders actually do about them?

In this episode of Insurance Hour, host Karl Susman tackled the state's most pressing insurance questions—from why non-renewals are accelerating to how catastrophe modeling (CAT models) could change the way risk is priced in California. The conversation offered a rare, balanced look at the root causes of the state's insurance crisis—and practical steps homeowners can take today to protect themselves.

The Non-Renewal Confusion: What's Actually Happening?

The most common question Susman hears from listeners is simple:
"Why did my insurance company drop me?"

It's not personal—and it's not always about the individual home.

"People think it's something they did wrong," Susman explained. "They think, 'I filed a claim,' or 'my roof is old.' And sometimes that's a factor—but often it's about the company's exposure in that region."

In other words, insurers are limiting risk geographically. If too many policies are concentrated in a wildfire-prone ZIP code, one large fire could devastate a company's solvency. To prevent that, some carriers have stopped writing or renewing business in those areas altogether.

"It's not because they don't like you," Susman said. "It's because their financial models say they can't afford to take on that much exposure in one area."

When insurers pull back, homeowners are forced to turn to the California FAIR Plan, the state's "insurer of last resort." But the FAIR Plan is not a traditional insurer—it's a fire-only policy funded by all admitted carriers. Homeowners must then buy a separate "difference-in-conditions" (DIC) policy to cover theft, water, and liability.

The result? Two policies instead of one—and a much higher total premium.

The FAIR Plan: A Safety Net Under Strain

The FAIR Plan was created in the 1960s after a series of catastrophic urban fires left many Californians uninsurable. It was never intended to be permanent coverage, but rather a temporary backstop.

Fast forward 60 years, and it's become a lifeline for hundreds of thousands of homeowners. That's created a new problem: too much risk concentrated in one place.

"Th ...

In this episode of "Insurance Hour," host Karl Susman interviews Janet Ruiz, the Director of Strategic Communications at the Insurance Information Institute (Triple-I). The conversation covers a broad range of topics related to the current state of the insurance market in California, particularly the challenges posed by Proposition 103 and the impact of recent catastrophic events like wildfires. Janet Ruiz provides insights into the role of Triple-I in educating both the public and industry professionals about insurance issues, the significance of adequate insurance rates, and the ongoing efforts to modernize California’s insurance regulations. The discussion also touches on the financial stability of insurance companies, the role of reinsurance, and the importance of mitigation strategies to improve resilience against natural disasters.

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California's Insurance Crossroads: Inside the Crisis and the Road to Reform

Insights from the Insurance Information Institute's Janet Ruiz

California, long known for its innovation and resilience, now finds itself in the midst of an insurance crisis that threatens both homeowners and the broader economy. Premiums are rising, major insurers have scaled back new business, and the state's regulatory system—designed more than 35 years ago—has struggled to adapt to modern realities.

To unpack the complexity behind these challenges, Karl Susman, host of Insurance Hour, sat down with Janet Ruiz, Director of Strategic Communications for the Insurance Information Institute (Triple-I). Their discussion illuminated the history, data, and structural issues driving California's insurance woes—and, importantly, what's being done to fix them.

Understanding the Triple-I: The Industry's Credible Voice

The Insurance Information Institute (Triple-I) isn't a lobbying group or a trade association in the traditional sense. As Ruiz explained:

"We don't lobby. We provide credible data. We're well-known for that. A lot of people use our website to collect information—what's the largest storm, how much has been paid out on wildfires, which years had the most hurricanes."

For over 60 years, the Triple-I has been a trusted source for journalists, lawmakers, and the public, explaining complex insurance concepts and providing transparent data about risk and recovery.

While the Institute is supported by insurance companies across the U.S., it exists primarily to educate. As Ruiz put it, "We help the public—legislators, media, homeowners, and business owners—understand what insurance does and how it works."

In a world where misinformation and politicization often distort the narrative, this educational mission is more vital than ever.

Proposition 103: From Consumer Victory to Industry Constraint

At the center of California's current crisis is a decades-old law—Proposition 103, passed by voters in 1988. Initially hailed as a consumer protection measure, it required insurance companies to get prior approval from the California Department of Insurance (CDI) before raising rates. It also created an "intervener process," allowing members of the public to challenge rate increases over 7%.

But over time, as Ruiz explained, the law's rigid structure has hindered insurers' ability to adjust to inflation, climate change, and rising rebuilding costs.

"Prop 103 artificially held California to lower insurance rates that weren't adequate," Ruiz said. "We saw this on the auto side as well as the homeowners side. For decades, companies would file small increases under 7% to avoid delays, ...

Karl's Final Thoughts: Why Car-Sharing Insurance Legislation Matters — Understanding AB 2743 and the Power of Consumer Choice

Insurance isn't glamorous. It's not the kind of topic that sparks viral conversations at coffee shops or fills social media feeds with excitement. But for millions of Californians, it quietly determines whether families recover after accidents, whether businesses survive economic uncertainty, and whether innovation can thrive in an increasingly complex marketplace.

In the closing segment of Insurance Hour, host Karl Susman reflected on his recent conversation with Assemblymember Blanca Pacheco (D–Downey) about Assembly Bill 2743 (AB 2743) — the car-sharing insurance bill that has captured attention throughout the state.

While the earlier episodes explored the legislative and political aspects of AB 2743, this final discussion offered something deeper: a broker's perspective on why insurance limits, liability choices, and consumer freedom matter more than ever.

The Core Issue: Liability Limits and Legislative Change

At its heart, AB 2743 addresses a technical but critical issue — insurance liability limits for peer-to-peer car-sharing platforms such as Turo and Getaround.

These companies allow individuals to rent out their personal vehicles to others, creating a "shared economy" model that benefits car owners, renters, and local communities. But new regulations set to take effect in January 2025 would drastically increase the minimum required insurance limits for these platforms — potentially driving them out of California altogether.

Susman summarized it succinctly:

"We had the pleasure of speaking with Assemblywoman Blanca Pacheco… about a bill that's going to potentially impact insurance limits on car sharing. I can't stop wanting to say ride sharing because I've heard it so much. But this is car sharing."

That distinction — between ride-sharing (like Uber) and car-sharing (like Turo) — is essential. Ride-sharing involves paying someone to drive you. Car-sharing, on the other hand, means renting someone's personal vehicle and driving it yourself. And under current California law, these models are treated very differently when it comes to insurance requirements.

Why Liability Insurance Matters

Susman used his airtime to educate listeners about a concept that sits at the foundation of all insurance: liability coverage.

"When you have an insurance policy, you're making a choice," he explained. "You decide how much liability insurance you want to have — how much protection you want between yourself, your assets, and the other party that might come after you in the event of some type of negligence."

Boosting Car-Sharing in California: A Deep Dive into Assembly Bill 2743 with Assemblymember Blanca Pacheco

California stands at a crossroads where innovation, regulation, and economic opportunity meet. The rise of peer-to-peer car sharing — a model where individuals rent out their personal vehicles through platforms like Turo and Getaround — has opened new doors for residents seeking flexibility, affordability, and extra income.

But it's also highlighted how quickly the modern economy can outgrow outdated laws. Enter Assembly Bill 2743 (AB 2743), championed by Assemblymember Blanca Pacheco (D–Downey).

AB 2743 aims to preserve fair insurance standards for peer-to-peer car sharing and ensure this fast-growing sector remains viable in California. Without it, an unintended change in state law scheduled for 2025 could make it prohibitively expensive for these businesses — and the Californians who rely on them — to operate.

In her recent conversation on Insurance Hour with host Karl Susman, Assemblymember Pacheco discussed the bill's progress, the legislative process, and why this measure is crucial for the state's economy and innovation ecosystem.

A Bill Near the Finish Line

As the discussion began, Susman noted how close AB 2743 is to becoming law.

"It's just close to the finish line," he said. "Would you say there's been a lot of opposition, or has everyone been on board?"

"For the most part, everyone's been on board," Pacheco replied. "It's received bipartisan support, so we've been fortunate. But that doesn't mean we haven't worked hard — we've worked hard from the very beginning."

That bipartisan momentum is no small feat. In an era when legislative gridlock is common, AB 2743 has attracted cooperation from both sides of the aisle because its core principle — protecting innovation while maintaining fairness — resonates across party lines.

What AB 2743 Actually Does

At its heart, AB 2743 is a clarification bill — one designed to fix an unintended consequence in California law.

A previous piece of legislation (SB 1107, authored by Senator Bill Dodd) raised minimum insurance requirements for most motorists. But in doing so, it inadvertently increased the financial responsibility limits for peer-to-peer car-sharing platforms far beyond what's reasonable.

"It would ensure car-sharing businesses stay viable here in the state of California," Pacheco explained. "Consumers should be allowed to rent out their vehicles — it's a good source of income and helps many families and constituents."