Unlocking America’s Future Warns Access Without Affordability Leaves Homeowners Vulnerable
WASHINGTON, DC – Farmers Insurance’s recent announcement that it will lift its cap on new California home insurance policies marks a positive step forward for homeowners who have struggled to find coverage in an increasingly hostile market. However, the company is simultaneously seeking significant rate increases that will price many families out of the market entirely. This incomplete progress underscores a harsh reality: California’s home insurance crisis is far from solved, and availability means nothing if homeowners cannot afford the premiums.
While lifting the cap addresses one side of the equation, it does nothing to solve the affordability crisis that has devastated California homeowners, who have absorbed 55% premium increases since 2019. Access to insurance becomes meaningless when families cannot afford the policies being offered. As rate hikes continue to accelerate, more homeowners will face an impossible choice between paying premiums that strain their budgets to the breaking point or falling into the state’s expensive last-resort FAIR Plan, which provides only bare-bones coverage at costs that far exceed the national average.
“It’s encouraging that Farmers Insurance is accepting new policies again, but let’s be clear: higher premiums mean the crisis isn’t over for California homeowners,” said Kyle Herrig, spokesperson for Unlocking America’s Future. “Families need both availability and affordability. California regulators must ensure that rate increases don’t make coverage unattainable for the very people who need it most. Access without affordability is not a solution.”
Farmers Insurance is one of the largest home insurance companies in the country, with nearly 3% of the property and casualty insurance market share. Home insurance companies’ profits hit an all-time high of $167 billion last year, clearing over $25 billion in underwriting revenue, with Farmers Insurance experiencing over $865 million in underwriting profits last year.
The current crisis stems from a systematic abandonment of California by major insurers. State Farm and other industry giants stopped writing new policies or severely restricted coverage, leaving hundreds of thousands of homeowners scrambling for alternatives. More than 250,000 policies were not renewed between 2020 and 2023. Private insurers issued fewer than 750,000 new residential policies in 2023, the lowest number since at least 2015. As families get dumped from their coverage, the FAIR Plan has seen policies nearly quadruple since 2015, transforming what was meant to be a temporary safety net into a permanent dumping ground for homeowners abandoned by the private market.
Despite abandoning hundreds of thousands of policyholders, insurers remain highly profitable. For every $100 California insurers collected in premiums last year, they paid out just $61.50 in claims. Even after the Los Angeles fires caused underwriting losses, the industry’s investment returns were 20 times larger than those losses. Insurers continue to claim financial hardship while posting record profits. The evidence is clear – this crisis is manufactured, not inevitable, and homeowners are paying the price for an industry that prioritizes profits over people.
