P&C Insurance Daily News

Farmers Insurance, the largest property casualty insurer headquartered in California, has removed its 9,500 new homeowners policy monthly cap, effective immediately, signaling confidence in California’s improved insurance market. The company filed a new rating plan requesting a 6.99% average statewide rate increase while improving its Home/Auto bundle discount from 15% to 22%, and plans to market directly to approximately 300,000 consumers in distressed areas beginning in early 2026.

Insurance Commissioner Ricardo Lara has approved temporary expansion of FAIR Plan coverage for high-value commercial properties, homeowners associations, and affordable housing developments, with coverage limits up to $20 million per building and a maximum of $100 million per location, set to sunset in 2028. The expanded coverage reflects Lara’s broader Sustainable Insurance Strategy aimed at reducing California’s over-reliance on the FAIR Plan as a last-resort backstop by requiring insurers to write policies in wildfire-distressed areas.

Farmers Insurance’s elimination of its homeowners policy cap demonstrates the company’s confidence in California’s improving insurance landscape and reflects broader adoption of Commissioner Lara’s Sustainable Insurance Strategy. In addition to removing capacity constraints, Farmers is expanding its offerings to include condominium, renters, personal umbrella, and manufactured home products, with plans to target distressed areas through direct consumer marketing and agency resources.

The U.S. property and casualty insurance market has entered a period of relative stabilization in 2025, with price increases moderating across most lines, though California wildfires generated $50 billion in insurance claims in Q1 2025 alone. Insurers are becoming more selective with risk appetites, particularly in high-risk areas, while commercial auto and excess liability lines continue to experience challenging market conditions despite slight price decreases.

The U.S. property and casualty industry recorded a $1.1 billion net underwriting loss in the first quarter of 2025, a dramatic swing from the $9.4 billion gain in the same period the previous year. California wildfires are expected to add approximately three percentage points to the industry’s combined ratio for 2025, depleting nearly half of the industry’s annual catastrophe budget and impacting underwriting profitability across the sector.