Two California home insurance providers, Travelers Insurance and the Interinsurance Exchange of the Automobile Club, seek rate increases under the state’s new catastrophe modeling rules adopted in 2025.
Travelers wants a 6.9% increase for single-family homes. It also proposes rate cuts of 17% for renters, 22.8% for condo owners, and 19.6% for condominium landlords.
The Interinsurance Exchange of the Automobile Club seeks an 11.2% increase for single-family homeowners. It plans to reduce rates by 27% for renters and 20.5% for condo owners.
California created the rate program after insurers pulled back from the state because of rising wildfire losses. The Department of Insurance developed the model in 2023 and offered it to insurers last year.
Under the rules, insurers get to use forward-looking risk factors and reinsurance costs in rate filings if they commit to writing more residential policies in high-risk areas.
In exchange for using the catastrophe model, insurers must write residential coverage for at-risk properties equal to at least 85% of their market share.
Travelers has 32,756 California policyholders in distressed areas out of 195,413 policyholders statewide. The company plans to include wildfire-prepared homes with hardening features and defensible space in its coverage plan.
The insurer also plans to help homeowners leave the FAIR Plan. The Fair Access to Insurance Requirements Plan serves property owners who cannot get coverage through the standard market because insurers consider their properties too risky, often because of wildfire exposure. It covers basic fire and smoke damage.
FAIR Plan use has surged as traditional insurers stopped writing new policies and cancelled others after heavy wildfire losses.
As of June 2025, the plan’s total exposure reached $650 bn. That marked a 42% increase since September 2024 and a 289% increase since September 2021.
Michael Klein, executive vice president and president of Personal Insurance at Travelers, said California homeowners want reliable coverage, fair pricing, and service from financially strong insurers.
The Interinsurance Exchange has 40,276 policies in distressed areas out of 564,025 total policies. It plans to add more than 2,000 policies in fire-risk areas and reduce its FAIR Plan exposure.
According to Beinsure analysts, the filings show California’s insurance reset starting to move from regulation into pricing. Consumers will see uneven results: higher premiums for some homeowners, lower costs for renters and condo owners, and gradual movement out of the FAIR Plan where insurers see manageable risk.
By last fall, several home insurers had announced plans to expand or resume new policy writing under California’s catastrophe model. The group included Mercury, CSAA, Pacific Specialty, Allstate, and Farmers.
The updated Travelers and Interinsurance Exchange plans would take effect later this year if the Department of Insurance approves them.
The rate application process takes about 120 days, a timeline reform advocates have criticised as too slow.
Nancy Watkins, a consultant at risk assessment firm Milliman, said filings under the new rules could not begin until mid-2025, so many resulting rates would not take effect until 2026. She said insurers need time to recover from decades of actuarially unsound pricing.
For consumers, she added, the market reopening will come gradually, not all at once.
The rate applications arrived days before the insurance department filed legal action against State Farm over alleged mishandling of claims from the January 2025 Los Angeles-area wildfires.
State Farm and the Department of Insurance have been locked in a months-long dispute since the company sought a 30% emergency home insurance rate hike after the January wildfires. The insurer’s interim 17% rate increase from June has since been settled.
