California has surpassed Florida as the U.S. state with the weakest property insurance market, according to E&E News by Politico, leaving many residents and businesses without coverage or with no other alternative but to turn to the state-run insurer of last resort.

What's happening?

Private insurers are continuing to withdraw from high-risk areas in California, even though the state enacted new policies this year to address the struggling insurance market. This comes as residents impacted by the Los Angeles-area January wildfires are waiting on claim approvals.

"The private insurance industry is still cherry-picking the least risky homes and dumping more Californians on the insurer of last resort," Carmen Balber, executive director of advocacy group Consumer Watchdog, told E&E News. California FAIR Plan data shows that the total number of dwelling and commercial "policies in force" since September 2021 has risen a stunning 154%.

According to E&E, "the number of policies in the California FAIR Plan nearly doubled between September 2023 and June 2025," going from 330,000 policies to 610,000 through June 30, which the outlet labeled as "unprecedented."

Why is this important?

The latest California FAIR Plan data is another indication that the state's insurance crisis is far from over. Experts also expect more challenges will be on the horizon, as an accelerated rise in global temperatures — linked to human activities, such as the burning of dirty fuels — has increased the severity and frequency of wildfires, per the state Air Resources Board. 

To address the lack of coverage and aid post-disaster recovery, officials have expanded FAIR Plan coverage. Yet California allows its plan of last resort to impose surcharges on private insurers if it doesn't have the funds to pay all of the claims, and insurers have tried to pass some costs on to policyholders.

What can be done about this?

In Florida, reforms passed in 2022 (which weren't without criticism and may still see further changes) have led to increased protections for policyholders and fewer enrollments in the Sunshine State's insurer of last resort, as E&E News reported. 

"You've got three years' worth of improvement in that market because of some of those reforms," said David Blades, an associate director at ratings company A.M. Best.

In California, a "Sustainable Insurance Strategy" is in the works to help stabilize insurance rates, including through catastrophe modeling, which takes into account historical wildfire data, climate trends, engineering research, and mitigation efforts, according to CBS 8.

Yet while insurers and environmental groups praised the move and — as California Insurance Commissioner Ricardo Lara pointed out — some insurers are reopening lines in California or choosing to stay in the state, consumer advocacy groups view the concept less favorably, per E&E News. Balber suggested Lara is not doing enough to hold insurers accountable. 

"His entire strategy has been to give the insurance industry everything they want and cross his fingers," she said. Balber's organization also recently received approval to proceed with a lawsuit against Lara and the Department of Insurance's plan to allow insurers to pass wildfire-related surcharges on to homeowners and businesses.

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