The Impact of Government Control and Recent Wildfires on California's Insurance Industry

The Impact of Government Control and Recent Wildfires on California's Insurance Industry


California's insurance industry is facing a troubling trend as insurers are being driven away by excessive government regulation and red tape. This destructive cycle not only impacts the industry but also has far-reaching consequences for working families and job creators. In this blog post, we will explore the challenges faced by insurance companies in California, for us particularly in the Los Gatos Mountains and Santa Cruz Mountains regions, and the potential ramifications for consumers.

The Exodus of Insurance Companies

The state of California has witnessed an alarming exodus of insurance companies in recent years, including major players like State Farm, Allstate and GEICO. This trend is driven by the stifling effects of government bureaucracy and over-regulation. As a result, families and small businesses in the Los Gatos Mountains and Santa Cruz Mountains are left grappling with limited options and soaring insurance prices.

The Impact of Government Control

Insurance companies in California face numerous hurdles created by the state's regulatory environment. The California Department of Insurance holds substantial power, dictating the policies companies can sell, the prices they charge, and even their day-to-day operations. This level of control leaves little room for companies to operate independently and stifles competition and innovation.

A Crisis of Over-Regulation

California's strict regulations have contributed to rising costs and limited coverage options for homeowners. For instance, when State Farm attempted to raise fire insurance rates in response to soaring costs, the state intervened and forced rate cuts. Allowing insurance companies to have rates that better reflect their reinsurance costs and allowing insurance companies to utilize forward looking risk models would significantly impact the insurance space. Current law only allows companies to look back when setting rates. However, given the issues with climate change, many insurance companies argue that looking backward does not allow companies to adequately capture risk. Such government interference undermines the financial viability of insurance companies, as they struggle to cover claims and maintain profitability. Ultimately, this over-regulation hurts the very people who rely on insurance for their homes, cars, and health.

Consequences for Working Families

The negative impact of the government-driven exodus from the insurance market is disproportionately felt by working families. With fewer insurance companies in the market, competition diminishes, leading to higher prices for essential coverage. As a result, families and job creators in the Los Gatos Mountains and Santa Cruz Mountains face the prospect of paying even more for insurance, exacerbating their financial burdens.

The Future Outlook

If the trend continues, the availability of home insurance in California, particularly in the Los Gatos Mountains and Santa Cruz Mountains regions, may become increasingly scarce. This would force individuals to rely solely on the state's limited home-insurance plan (FAIR Plan), leading to higher taxes and fewer options for consumers. It is crucial for elected officials in California and across the country to prioritize maintaining a healthy insurance market by promoting competition and avoiding excessive regulation.


The insurance industry in California, including the Los Gatos Mountains and Santa Cruz Mountains regions, is being hampered by government control and over-regulation. The exodus of insurance companies not only limits consumer choices but also drives up insurance prices, disproportionately affecting working families. It is imperative for policymakers to recognize the detrimental effects of excessive regulation and work towards fostering a competitive insurance market that ensures affordable coverage for all. By doing so, we can protect the interests of working families and create a more robust and consumer-friendly insurance landscape.

When submitting an offer on a home, consult with your agent and an insurance broker to get a true understanding of the costs to insure the home. The landscape is constantly changing, make sure you're being updated with regularly with accurate information. 

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