California is in the midst of an insurance crisis, and a new report highlights several contributing factors, including the unsustainable growth of the FAIR Plan, the state’s prolonged rate filing and approval process, and the persistent cultural disconnect between collective concern and individual action, according to a new report by the Center for California Real Estate (CCRE).
The report, “Proposed Solutions for California’s Homeowners Insurance Challenges,” provides key insights from a recent forum of cross-industry leaders seeking to address California’s insurance crisis through policy discussions and industry response.
The forum was facilitated by Pete Peterson, dean of the Pepperdine University School of Public Policy, and included twenty leaders from academia, consumer advocacy, fire mitigation education, and the building and insurance industries, representing both California and national perspectives.
It followed multiple recent cross-industry panels raising critical concerns surrounding the state’s escalating homeowners insurance crisis.
“It’s time to move from fragmented efforts to coordinated and public-private sector solutions that can stabilize the market, protect homeowners, and build long-term sustainability across the state,” said Peterson. “This report is more than a set of insights – it’s a road map for resilience, grounded in real-world expertise and actionable strategies. This report should be on the desk of every policymaker in California.”
Recommended solutions center on key themes involving modernizing the regulatory framework, scaling defensible space and home hardening programs, advancing data transparency and consistency, and advancing public engagement and education.
Lessons from other states contributed to the exploration of possible solutions, with Colorado’s community-level assessments, North Carolina’s resilience bond, and Alabama’s fortified roofs cited among programs with the greatest potential. California initiatives and practices were also examined for wider application.
The report cites six key proposed solutions designed to address the most pressing matters within the insurance crisis with the greatest expediency:
1- Address rate approvals and price suppression to expand market participation
California’s required rate increase approvals take nearly 11 months on average, compared to the national average of just 64 days.
Fast-tracking the process will create greater predictability for private insurers, creating an incentive to stay in the market or return to California.
Participants suggested automatic, incremental rate approvals like those used for water rate and property tax increases to streamline processing.
2- Secure long-term, scalable mitigation funding
Participants noted that without comprehensive mitigation efforts at the property level, any meaningful insurance reform will ultimately fall short.
Statewide investment in mitigation measures is essential to delivering long-term resilience, and it comes with a hefty price tag: an estimated $20 billion to $25 billion in costs over the next five years, and $2 billion annually thereafter, the report noted.
Panelists suggested a co-funding model that includes utility and insurance companies supporting the high-impact mitigation zones.
3- Link financial incentives to risk-reduction measures
Insurance discounts tied to risk reduction with a clear and consistent set of standards will financially motivate homeowners to act at the property level, considered the first line of defense in mitigation efforts.
Programs like Alabama’s Fortified homes, which sell for 7 percent more than comparable properties, are an example for study and adaptation; another is a 2021 joint study by Zesty.ai and the Insurance Institute for Business and Safety (IIBS) showing enhanced mitigation measures in Zone 0 can improve a home’s chances of survival by 50 percent.
4- Create shared standards for fire risk modeling
Panelists cited the need for risk modeling standards, highlighting both real-world and scenario-based projections usable by regulators, policymakers, consumers and insurers.
Initiatives like FireBench create a standard set of test cases with valuation metrics seen as a true benchmark against which risk and mitigation efforts can be measured and are actionable. At the same time, flexibility in application and personalization is key. For example, Mercury Insurance utilizes parcel-level modeling combined with onsite inspections to differentiate risk levels between similar properties in Paradise, California.
5- Prioritize mitigation efforts through public education and community action
Bridging the public knowledge gap around defensible space and home hardening through education, inspections, and targeted incentives will be essential to advancing individual resilience and, ultimately, stabilizing the broader insurance market, the report advised.
6- Leverage realtor-client relationships for trusted messengers and mitigation connectors
Due to their personal connections, regular social interactions and relationships, and advisory role within communities, participants cited realtors as ideally positioned and incentivized to share both education and resources around mitigation and collective responsibility.
More than half of realtors across the state cited access to insurance as their number one industry-specific concern in 2024.
In California, participants noted realtor programs in progress that provide access to wildfire risk reports, help buyers comply with Zone 0 regulations, and co-host fire safety events for communities.
California’s first-in-the-nation Wildfire Prepared Neighborhood pilot program combines home hardening, defensible space enforcement, vegetation management, and community organizing, with local Fire Safe Councils emerging as trusted stewards to drive grant-funded activities around community outreach and neighborhood mitigation projects in partnership with local fire departments. While beneficial, the measures require both long-term funding and individual and community-wide public support, the report added.