California home insurance costs likely to continue rising for years to come, says expert panel

SACRAMENTO, Calif., May 8, 2025 /PRNewswire/ -- Leading housing insurance experts gathered in Sacramento last week for a panel discussion around the state's home insurance crisis hosted by the Center for California Real Estate (CCRE). Among key insights shared by panelists, Stanford University Climate & Energy Policy Director Michael Wara predicted California's insurance prices will likely continue to rise for the next 10 to 20 years.

The panel, Strengthening California's Insurance Market: Expanding Access & Stability, featured the latest insights and solutions to address insurance challenges California homeowners are facing; and expanding access to and building a more stable, resilient insurance market. The panel also featured David Russell, director of the CSU Northridge Center for Risk Management and Insurance; John Norwood, chief lobbyist for the Independent Insurance Agents and Brokers of California; Emily Rogan, senior program officer at United Policyholders and Sanjay Wagle, senior vice president of Governmental Affairs at the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.). Reporter Megan Fan Munce from the San Francisco Chronicle moderated the discussion.

A video recording of the panel can be accessed here: https://www.ccre.us/pastevents, and a photo can be accessed here.

Among the key insights from the cross-sector panel discussion:

Solving for availability of insurance before affordability
Russell told the audience that attracting capital back to the market is the priority in order for insurance to become more widely available, and to expect an increase in premium costs. He argued Californians must share the burden of higher rates, even in lower risk areas ― a concept not palatable for many. 

"In high-risk areas, to be able to afford to insure, they're going to have to raise the premium on someone else. We have a cost sharing issue," he said. "I've seen huge rate increases in my own policy, even though I'm in a low-risk area, and I [have] filed no claims, ever. So, these risks are being socialized, and there are California citizens that don't want to pay a part of the premium that someone else has imposed on the system," Russell said.

Rising construction costs will also contribute to insurance coverage conversations, as demand for both materials and worker availability outstrips supply, panelists noted. Contractors are being increasingly drawn to Los Angeles, where they can currently make far more than in other areas of California ― impacting not only local prices but construction schedules across the state.

"I know electricians and other people here in Sacramento [that] have been offered three times what they're making in Sacramento to come to L.A., so we're going to see that play out," said Norwood.

FAIR Plan has been a "quick fix" but is not a long-term solution
Norwood addressed increasing challenges with the state's insurance-of-last-resort program, calling the California FAIR plan 'the elephant in the room.'  "The FAIR Plan has ballooned to half a million or more policies, [and] there's already been a billion-dollar assessment. My understanding is their losses in the LA fires are somewhere north of $4 billion," he said.

Norwood warned that the depopulation of the FAIR plan is necessary to get temporary policyholders on to better coverage. As estimates following the Southern California wildfires continue to rise, the secondary reinsurance market is showing signs of impact, contributing to rate increases. "Reinsurance is set up in such a way that past the first $1.2 billion, the losses will be shared 50-50 [by the initial insurer and these additional insurers] ― it is those assessments that cause smaller market share carriers to hesitate about coming to California," he said.

Rogan urged homeowners to also check their policies to make sure they aren't under-insured, an increasingly common scenario for this year's Southern California wildfire victims, many of whom have discovered that contemporary replacement cost estimates are far outpacing covered amounts. "Altadena families underinsured by millions are losing generational wealth," she said. "Purchase as much additional replacement cost insurance as you can."      

'We cannot insure our way out' 
Panelists agreed that insurance cannot be the standalone solution to mitigating risk. Wara emphasized the need to see government incentives and more insurance incentives for home hardening and risk reduction.

"We cannot insure our way out of this problem," he said. "The thing that is not happening enough is actual physical risk reduction. We need to reduce risk so there is less risk to transfer, and so we can afford that risk transfer."

Wara said the state's wildfire risk has grown exponentially in recent decades. "If you talk to any firefighter and ask them the following question, 'is the situation today the same as when you first started, 20-30 years ago,' they'll say it's totally unrecognizable," Wara said.

Meanwhile, panelists called for more clarity and consistency around home hardening measures. "Right now, the insurance commissioner has the 'safer from fire' regulations, that require companies to provide discounts for home hardening. But you really can't provide discounts when your rates aren't adequate, and hopefully when rates do achieve adequacy, companies [will] recognize home hardening and community hardening," said Norwood.

Rogan emphasized that the community-at-large must share in the effort to reduce risk. "Reducing the risk will have benefits that will hopefully lead insurance companies to agree not to drop people if they take these steps and continue offering insurance to those who need it," she said.

Insurance impacts to real estate transactions on the rise
C.A.R. President Heather Ozur revealed that a record-high 55.3 percent of recently surveyed REALTORS^® said access to homeowners' insurance is their number one industry-specific concern ― more than double the 26.8% noted last year. REALTORS^® also indicated that insurance is nearly tied with affordability as posing the greatest challenge to their business in the year ahead – above other long-standing challenges such as inventory and interest rates.

Real estate agents are now factoring insurance costs into transactions, affecting affordability and the buying process, said Sanjay Wagle. "Most of our REALTORS^® are having to address the insurance problem up front. Traditionally, it's just been the mortgage, taxes, insurance, and now that insurance component is really affecting affordability depending on the area you live in…[it has] become a high priority."

As a result, Wagle said REALTORS^® are an increasingly valuable part of the transaction process when it comes to encouraging and supporting home hardening ― and providing real-time insurance market insight.

Rogan suggested REALTORS^® can play an important role in helping sellers stage for insurance considerations. "Everyone in this room has probably staged the inside of a house, and maybe it looks like we're staging the outside of the house as well now," she said.

In late 2023, C.A.R. partnered with FortressFire to provide a Wildfire Disclosure Report, now part of the standard Residential Purchase Agreement used throughout the state of California. The form documents the specific vulnerabilities of a home and provides a roadmap for how to protect and insure it, for the safety and security of homeowners' investments. To date, more than 11,000 forms have been completed ― a significant increase in awareness around advancing fire-resilient homes statewide.

Earlier this spring, the Center for California Real Estate hosted a panel on rebuilding after wildfires. Key takeaways from the panel can be accessed here. 

About the Center for California Real Estate 
The Center for California Real Estate (CCRE), an institute of the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.), advances knowledge and research by collaborating with varied partners, spurs innovative thinking about key issues facing California and the real estate industry, and extends C.A.R.'s influence via intellectual engagement with different audiences, diverse stakeholders and new external partners.

CCRE serves as a nexus for multi-disciplinary thinking aimed at solving some of the state's most challenging issues. Bringing together key experts from a variety of fields — from academics and policymakers to industry leaders — CCRE produces new knowledge and serves as a key resource about housing issues for all C.A.R. members, external entities, the media and the public.

About the CALIFORNIA ASSOCIATION OF REALTORS^®

Leading the way…® in California real estate for nearly 120 years, the CALIFORNIA ASSOCIATION OF REALTORS^® (www.car.org) is one of the largest state trade organizations in the United States with 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

SOURCE CALIFORNIA ASSOCIATION OF REALTORS' Center for California Real Estate