For anyone tracking property insurance market dislocation, the shorthand has become irresistible. A major catastrophe-exposed state watches its largest carriers retreat, premiums climb at multiples of inflation, and a state-backed insurer of last resort swells into one of the largest property writers in the state. That arc described Florida from roughly 2020 through 2023. It describes California today. The temptation to call California “the new Florida” is understandable, and at the level of pattern recognition it is fair between these two catastrophe markets.
The comparison is useful right up to the point where it starts to drive decisions. Underneath the shared symptoms sit two markets with different perils, different regulatory root causes, and different trajectories. For executives weighing market entry, capital deployment, or product strategy, the divergence matters more than the resemblance.
The Resemblence is Real
Start with what the two markets genuinely share, because it is substantial.
In California, roughly 400,000 policies have been non-renewed or canceled since 2021, according to CalMatters reporting on Department of Insurance data. Stanford’s Climate and Energy Policy Program found that seven of the state’s twelve largest home insurers reduced or halted new underwriting in recent years, and that average premiums rose 84 percent between the end of 2020 and March 2026. State Farm General, still the state’s largest fire insurer, has reported paying out roughly $1.26 in losses and expenses for every dollar of premium collected over a nine-year span, producing about $5 billion in cumulative losses, which is the financial logic behind its May 2023 decision to stop writing new business.
As private capacity withdrew, risk concentrated in the FAIR Plan, California’s insurer of last resort. The plan entered 2025 with approximately $600 billion in exposure and more than 550,000 policies in force, having grown its policy count by roughly 40 percent during 2024, per A.M. Best figures. Stanford’s research shows FAIR Plan penetration climbing from about 1.5 percent of California single-family homes at the end of 2020 to roughly 5 percent by March 2026, and notes a leading indicator worth watching closely: the plan now backs about 6 percent of new single-family mortgage originations, meaning dependence on minimal last-resort coverage is showing up in fresh home loans at a rate above its overall market share.
This is the Florida playbook in its broad strokes. Carriers exit, the residual market absorbs the overflow, premiums spike, and policyholders end up piecing together coverage. Citizens Property Insurance Corporation peaked at 1.42 million policies in October 2023, making it the largest property insurer in Florida and a systemic concern for the entire state. If you squint, the two crises look like the same movie.
The Divergence is Where the Analysis Lives
They are not the same movie. The peril and the regulatory cause differ in ways that determine how each market behaves and how each gets fixed.
Florida’s crisis was a litigation crisis wearing a hurricane costume. The Insurance Information Institute documented that Florida accounted for more than 72 percent of the nation’s homeowners claim-related litigation in 2023 while representing only about 10 percent of U.S. homeowners claims. The cost drivers were one-way attorney fee statutes and post-loss assignment of benefits, which together made litigation against insurers extraordinarily profitable and fueled inflated roof-replacement claims. Hurricane exposure set the stage, but the thing breaking carrier balance sheets was a legal-economic incentive structure.
California’s crisis is a rate-adequacy crisis sitting on top of genuine wildfire risk. There is no comparable litigation-fraud component. The binding constraint is Proposition 103, the 1988 ballot measure that governs how rates are set. Until recently, Prop 103 prevented insurers from pricing to forward-looking catastrophe models and, uniquely among the states, barred them from passing reinsurance costs through to policyholders. That second restriction is not a footnote. McKinsey estimated that reinsurance costs nearly doubled from 2017 onward, with a 35 percent spike in 2023 alone, and California carriers had no compliant mechanism to recover those costs in rate. The 2025 Palisades and Eaton fires, with insured losses estimated near $40 billion, hit a market that was already structurally unable to charge for the risk it was carrying.
The distinction is the entire ballgame. Florida fixed a problem in its civil justice system. California is trying to fix a problem in its rate-setting machinery. A solution engineered for one will not transfer to the other.
Where Each Catastrophe Market Stands in 2026
The trajectories have diverged sharply, and this is the part most likely to surprise anyone still working from the 2023 mental model.
Florida has turned the corner. The reforms of SB 2-D (2022) and SB 2-A (December 2022) eliminated one-way attorney fees and banned assignment of benefits, and the 2023 tort package tightened bad-faith and filing rules. The market response has been measurable. Property insurance lawsuit filings fell roughly 23 percent from 2023 to 2024 and another 25 percent in the first half of 2025. Eighteen new property insurers have entered the market since the reforms, and Citizens has shed more than a million policies, falling from its 1.42 million peak to roughly 336,000 by early 2026, a reduction of about 76 percent, with 546,000 of those policies moving to the private market in 2025 alone. The Florida Office of Insurance Regulation reported a return to profitability, with positive net income and underwriting gains after seven consecutive years of losses from 2017 through 2022. Citizens recommended rate cuts for most policyholders for 2026, an averaged statewide decrease of 8.7 percent, and FIGA voted to end its 1 percent emergency assessment two years early. Premiums remain the highest in the nation, near $8,458 on average per CalcLogix’s compilation of OIR and carrier filings, so no one should mistake stabilization for affordability. The direction, however, has clearly reversed.
California is early in its correction. The Sustainable Insurance Strategy, the Department of Insurance framework intended to restore rate adequacy in exchange for carrier commitments to write in distressed areas, only began producing filings in late 2025. Mercury filed the first homeowners rate request under the SIS in August 2025, a 6.9 percent average increase, approved in December and paired with a commitment to write more than 38,000 new policies over time, including FAIR Plan depopulation. CSAA filed a parallel 6.9 percent increase, began offering quotes to qualifying AAA members holding FAIR Plan policies in Northern California, and rolled out a home-hardening discount of up to 12.5 percent. Farmers removed its policy cap in November 2025, signaling intent to expand. These are real green shoots, and they point in the same direction Florida traveled, but California is two to three years behind on the timeline, and its residual market is still growing rather than shrinking.
One structural feature of the California correction has no clean Florida analog: the surge into surplus lines. New non-admitted homeowners business climbed to roughly 320,000 policies in 2025, up from about 50,000 in 2023, per Insurance Journal’s reporting on a structural shift in the E&S market. The average insured value of those properties has been falling, which indicates that ordinary admitted-market homes, not just high-value or unusual risks, are now flowing into the surplus lines channel. For product and underwriting leaders, that migration is a signal about where appetite is actually being expressed while the admitted market recalibrates.
If You’re Considering Expanding into California
A few implications follow for executives and product teams trying to read these markets rather than just narrate them.
First, treat the regulatory lever as the leading indicator, not the loss experience. Florida’s recovery did not begin when hurricanes stopped. It began when the legislature removed the litigation cost driver and reinsurers responded with more capacity at better terms. California’s recovery will track the credibility and durability of the Sustainable Insurance Strategy and any movement on Prop 103, not the next fire season in isolation. If you are timing entry, the policy calendar is more predictive than the weather.
Second, the reinsurance pass-through mechanics deserve direct attention. The December 2024 Net Cost of Reinsurance rule is the structural change that makes California writable again for carriers that price to a global reinsurance program. Modeling the recovery without modeling that pass-through will misstate the rate adequacy picture.
Third, mitigation is becoming a rated variable in both states. Florida’s wind-mitigation credit regime has long shaped premium outcomes, and California is now building the analog through home-hardening discounts and the IBHS Wildfire Prepared Home designation. Product teams that can ingest property-level resilience data and reflect it in pricing and eligibility will have an advantage as both states move from blunt territory-based underwriting toward feature-based risk selection.
Fourth, watch the residual and surplus lines markets as appetite signals. FAIR Plan depopulation commitments tell you which carriers believe the rate environment has turned. The surplus lines migration tells you where risk is clearing at market price while the admitted market lags. Both are cleaner reads on real appetite than press releases.
Is California Really the New Florida?
As a description of market structure under stress, the two states are the anchor case studies of climate-driven dislocation in the United States, and other states including Louisiana, Colorado, and parts of Texas are forming a queue behind them. As a guide to cause and cure, the comparison breaks down precisely where decisions get made. Florida solved a tort problem and is two to three years into a genuine recovery. California is solving a rate-adequacy problem and is at the front edge of its own. The shared symptom is carrier retreat. The diagnosis, and therefore the prognosis, is different in each case.
For an industry that prices uncertainty for a living, that distinction is worth holding onto. The states that come next will not all rhyme with Florida, and assuming they do is how good capital ends up early or late to the wrong market.
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Sources and Further Reading:
• McKinsey & Company, “Forging a resilient future for California’s homeowners and insurers” (2025)
• Insurance Journal, California surplus lines structural shift analysis (April 2026)
• California Department of Insurance, Sustainable Insurance Strategy and market filings
• Chambers and Partners, “Insurance & Reinsurance 2026 USA: Florida” practice guide (FLOIR testimony)
• Florida Realtors, “Florida Insurance Trends Shift Toward Relief” (Triple-I report, April 2026)
• State Farm, “State Farm in California” (2026); A.M. Best, California FAIR Plan exposure data (2025)
• Florida Statutes: SB 2-D (2022), SB 2-A (2022), HB 837 and SB 7052 (2023)
• California Proposition 103 (1988) and the December 2024 Net Cost of Reinsurance rule
