SACRAMENTO, CA / ACCESS Newswire / September 18, 2026 / Following the collapse of Gov. Gavin Newsom's push for legislation addressing wildfire liability, a new Pacific Research Institute booklet warns California policymakers against responding to the state's continuing wildfire and insurance challenges by reversing regulatory reforms that are finally showing signs of restoring competition and coverage.
The warning comes as voters prepare to choose California's next insurance commissioner in a closely watched race that could determine the future direction of the state's troubled insurance market.
In How California Burned Down Its Home Insurance Market and Why Regulatory Reform Can Rebuild It, Free Cities Center director Steven Greenhut examines how decades of state regulation helped turn California's longstanding wildfire risks into an insurance availability crisis - and what policymakers should do next.
Click here to download the booklet
"Sacramento just spent weeks fighting over who should pay for wildfire losses. The bigger question is whether California's insurance system properly prices and reduces those risks in the first place," Greenhut said. "California's insurance crisis wasn't simply caused by wildfires. Bad public policy turned wildfire risk into an insurance-market disaster."
Greenhut traces the crisis to Proposition 103's rate-control system and a cumbersome regulatory process that made it difficult for insurers to adjust prices to reflect changing risks. As insurers reduced their California exposure, homeowners increasingly turned to the state-created FAIR Plan, whose total exposure has reached roughly $750 billion.
But the booklet finds signs that California's insurance market is beginning to stabilize.
Insurance Commissioner Ricardo Lara's Sustainable Insurance Strategy accelerated rate reviews, permitted forward-looking catastrophe modeling and allowed insurers to account for reinsurance costs. Several major insurers have subsequently announced plans to expand underwriting, while growth in FAIR Plan policies has slowed.
That progress makes the November contest between Democrats Ben Allen and Jane Kim particularly consequential. Allen has pledged to continue Lara's reforms, while Kim proposes a publicly run "Disaster Insurance for All" program.
"California may finally be moving away from an insurance availability crisis, but we're not out of the woods," Greenhut said. "The next insurance commissioner could either build upon reforms that are bringing companies back into the market or pursue policies that risk sending them heading for the exits again."
The booklet also examines wildfire mitigation and home-hardening incentives, FAIR Plan reform and innovative market-based approaches that tie insurance pricing to reducing wildfire risks. Greenhut concludes that recent progress demonstrates why policymakers should allow the reforms to work rather than return to policies that contributed to the crisis.
About the Free Cities Center
PRI's Free Cities Center cultivates innovative ideas to improve urban life based around freedom and property rights - not government. It produces incisive reporting and analysis on crime, housing, education, homelessness, social mobility and other urban issues through commentaries, videos, and webinars.
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SOURCE: Pacific Research Institute
View the original press release on ACCESS Newswire:
https://www.accessnewswire.com/newsroom/en/business-and-professional-services/new-pri-booklet-california-insurance-crisis-is-a-regulatory-cris-1223273
