Insurance Crisis A Top Focus of City Committee Meeting Tuesday

State Farm’s request this week for dramatic insurance rate increases in California — including a 22% increase for homeowners, 15% increase for condominium owners, and 38% increase for renters effective May 1, 2025 — dominated insurance-related discussions at Tuesday’s Pasadena Legislative Policy Committee meeting.

State Farm said it seeks the increases to help offset hefty payouts to policyholders from recent wildfires.

At the Pasadena meeting, Committee Chair Steve Madison and Councilmember Gene Masuda expressed serious concerns about insurance availability and affordability for Pasadenans. The Council’s Legislative Policy Committee directed City staff to track insurance-related legislation closely and requested the City’s State Legislative advocates provide updates at future meetings.

The insurance crisis discussions occurred alongside other wildfire recovery matters, including Committee consideration of Assembly Bill 239 to establish a state-led disaster housing task force coordinating efforts between state, federal and local agencies to rebuild housing in communities impacted by the wildfires that began on January 7, 2025.

The insurance crisis has taken center stage amid broader discussions of wildfire recovery as legislators and regulators scramble to stabilize California’s increasingly fragile insurance market.

About 30 bills directly relating to wildfire and insurance are currently under consideration in Sacramento, with another 30 to 50 expected in the coming weeks.

Key among these is Assembly Bill 226, which would authorize the California Fair Plan Association — the state’s insurer of last resort — to seek infrastructure bank bonds to finance claims and increase its liquidity and claims-paying capacity. The California Fair Plan Association serves as a joint reinsurance association where all licensed basic property insurers participate to provide coverage for those unable to obtain insurance through normal channels.

This legislative push follows December’s regulatory changes by the State Insurance Commissioner requiring companies to increase coverage in high-risk areas while allowing them to factor catastrophic risk into policy rates. Senate Democrats are also preparing to introduce their own package of insurance-related bills.

State officials have already taken some emergency measures, with the Governor recently issuing executive orders extending deadlines for fire survivors and implementing additional relief measures for impacted areas.