Part 7/13:
California's insurance premiums are among the 20% highest in the U.S., driven by increased wildfire losses, inflation, and regulatory constraints. Since 2017, devastating fires in both Northern and Southern California caused massive losses; insurers' eight-year profit streak was wiped out over just two fire seasons.
Insurers' response was cautious. Many stayed in the market but became selective, especially after utility-related fires in 2017 and 2018. The utility infrastructure caused significant damage, raising questions about the sustainability of existing rate structures. Insurers began to doubt whether they could obtain adequate rates, leading to a slowdown in new policy issuance.