Farmers Insurance is ending its cap on new homeowners policies in California, raising hopes that the tight California home insurance market will start to open up again.
In a recent statement, Farmers Insurance said it will fully lift the limit it has enforced since July 2023, which held new homeowners policies in the state to a maximum of 9,500 per month.
Behram Dinshaw, president of personal lines at Farmers Insurance, said the move reflects the company’s commitment to homeowners in California and will give consumers more choice and better access to coverage.
Industry observers expect that, as the state’s second-largest homeowners insurer, Farmers Insurance could set the tone for the broader market. If Farmers Insurance expands again, other carriers may follow to avoid losing market share.
Karl Susman, an Los Angeles-area insurance expert at Susman Insurance Agency, called the decision “a signal of recovery for the insurance market.” He added that if Farmers Insurance moves first, other insurers will likely feel pressure to re-enter or expand, which could increase options and eventually put downward pressure on prices.
However, analysts caution that premiums are unlikely to drop quickly. Hannah Jones, an analyst at real estate site Realtor.com, said that unless the underlying risk environment improves, the return of some insurers will not by itself lead to large rate cuts.
At the same time, Farmers Insurance has filed a new rate plan that reflects the state’s “sustainable insurance strategy” aimed at stabilizing the California market. As part of this, the insurer is expected to issue several thousand new homeowners policies even in areas designated by the state as disaster-vulnerable.
These disaster-vulnerable areas are communities with high wildfire risk, where private insurance has become so scarce that many homeowners have had to rely on the state-run FAIR Plan, the last resort for property coverage in much of California.
After the January 2025 Palisades–Eaton fires, which destroyed more than 12,600 homes and caused up to 131 billion dollars in property losses, enrollment in the FAIR Plan surged. As of last June, about 590,000 property owners were using the FAIR Plan, nearly twice the number in 2021.
In recent years, several major insurers have pulled back from the state. State Farm stopped writing new homeowners policies, and Allstate temporarily halted new homeowners coverage starting in late 2022, citing rising natural disaster risks and costs.
BY HOONSIK WOO [woo.hoonsik@koreadaily.com]
