P&C Insurance Daily

Farmers Insurance, the largest property casualty insurer headquartered in California, has removed the cap on new homeowners policies previously limited to 9,500 per month, effective immediately. The move reflects confidence in California’s improving insurance market driven by Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, and Farmers has filed a new rating plan requesting a 6.99% average statewide rate increase while improving bundle discounts from 15% to 22%.

Insurance Commissioner Ricardo Lara is advancing comprehensive reforms of California’s FAIR Plan, including temporary expansion of coverage for high-value commercial properties, homeowners associations, and affordable housing developments, with high-value commercial coverage offering limits up to $20 million per building. The reforms aim to restore the FAIR Plan to its original purpose as a temporary solution while expanding traditional market options and addressing decades of availability issues that have driven the FAIR Plan to approximately 4% of California’s residential market.

The U.S. property and casualty insurance market has transitioned from a prolonged hard market into relative stabilization in 2025, with price increases moderating across most coverage lines while commercial auto and excess liability remain challenging. California wildfires generated $50 billion in insurance claims in Q1 2025, adding approximately three percentage points to the industry’s net combined ratio and depleting nearly half of the annual catastrophe budget, prompting insurers to become more selective with risk appetites in high-risk areas.

The U.S. property and casualty industry recorded a $1.1 billion net underwriting loss in the first quarter of 2025, a significant swing from the $9.4 billion gain recorded in the same period the previous year, primarily driven by major California wildfire claims. This reversal reflects the substantial impact of catastrophic losses on industry profitability in the current insurance cycle.

Industry forecasts project direct premiums written growth of 5.5% for 2025 and a moderation to 4% growth in 2026 for the U.S. property and casualty sector. Premium growth dipped below 7% in the first quarter of 2025, signaling a normalization from the elevated rates seen during the hard market period.