The California Golden Fleece Award 2025: A Tribute to California’s Insurance Disaster

And the 16th California Golden Fleece^® Award goes to...

California, for its self-imposed insurance crisis, with homeowners facing selling because they can’t get insurance.

The award is given by the Independent Institute in recognition of state or local government spending programs, taxes, or regulations that fleece California taxpayers, consumers, or businesses.

Context and History

The Independent Institute reports that the insurance regulatory framework in California has created a situation in which the insurance premiums that companies collect do not reflect the risk that they are exposed to, causing insurers to leave the state.

Why This Award?

The report explains how Proposition 103 created a system that limits insurance rate changes, leading to unstable markets.

• Rate change applications take considerable processing time, limiting insurance companies' ability to plan adequately and respond to changing market conditions.
• The "deemer" clause has been rendered moot due to the CA Dept. Insurance's request for waivers.

Eliminating restrictions on rate setting and repealing Proposition 103 are proposed reforms to fix California’s insurance disaster.

How Did We Get Here?

Read the full report by Kristian Fors

The report explains how California arrived in this unstable place, and how insurance rate change applications take such considerable processing time.

1. Fire mitigation discounts have been undermined due to rates not being actuarially sound.
2. Homeowners in high-risk areas lack financial incentive to engage in good practices because they were not bearing the full financial brunt of the risk.

The report highlights that regulation, even when well-intended, can devastate markets by setting into motion harmful consequences.

Solutions

1. Eliminate Restrictions on Rate Setting and Repeal Proposition 103
2. Wildfire Policy Reforms
3. Housing Reforms

"The failure of California’s homeowners’ insurance market is a cautionary tale for the rest of the nation. Regulation, even when well-intended, has the potential to devastate markets by setting into motion harmful consequences."— Kristian Fors

Conclusion

"California undermined the fundamental workings and incentives of its homeowners’ insurance market, and its residents are suffering the consequences."— Kristian Fors