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California becomes the US's largest fire insurance market
Fire premiums in California rose 126.5% over five years to $3.37 billion in 2024, driven by aggressive rate hikes and carrier pullbacks.
California has become the largest market for fire insurance in the United States, according to a special report by Insurance Business America.
The report says fire insurance premiums in the state grew 126.5% over five years, reaching $3.37 billion in 2024 and overtaking Texas for the top spot. It also points to California’s 2024 loss ratio of 28.5%, which was among the lowest for major states, suggesting pricing has moved faster than losses.
Insurance Business America cautions that the margin is unlikely to persist, noting that January 2025’s Los Angeles wildfires are expected to hit statutory data and worsen loss metrics. It draws a parallel to Hawaii, where the loss ratio spiked to 359.4% in 2023 after Maui wildfires before normalizing to 52.5% in 2024 as costs settled.
The report says major homeowners insurers, including The Hartford, State Farm, AIG, and Allstate, stopped writing new homeowners’ policies in California, shifting business to surplus lines and the FAIR Plan. It adds that the FAIR Plan now covers over 463,000 homes with $450 billion in exposure, and that a December 2024 regulatory reform allows reinsurance costs into rate-setting, a change that may help draw capacity back.