Governor Gavin Newsom put the entire state under a formal state of emergency on Monday. Federal forecasters now think the El Niño building in the Pacific could be the strongest on record, and for a property insurance market that's already stretched thin, that's a bad combination.
The proclamation is meant to get money, staff and equipment in place before the rain and surf arrive, instead of after. It also formalizes emergencies in several counties, including Santa Barbara, that have already taken damage from storm activity this year.
"California is strongest when we look out for one another," Newsom said in a statement announcing the declaration. The order clears the way for faster procurement, mutual aid between agencies, and streamlined permitting for emergency repairs, the kind of red-tape relief coastal cities have been asking for since late summer.
California didn't need a forecast to know this El Niño meant business. It got a preview over Labor Day weekend, when a powerful south swell off the remnants of Hurricane Marie tore into Southern California beaches. The damage hit exactly where insurers worry most: the immediate coastline.
In Laguna Beach, erosion left six oceanfront homes yellow-tagged and took out part of the Aliso Beach parking lot, prompting the city to declare its own local emergency. A few miles south in Dana Point, beachfront homes along Beach Road were red-tagged as uninhabitable and several more yellow-tagged after waves collapsed decks and, in one case, part of a house.
Carlsbad declared its own local emergency to protect Carlsbad Boulevard from erosion, and a sinkhole at a Malibu beachfront property forced evacuations at dozens of nearby homes. Orange County activated its emergency operations center once two cities within it had filed local declarations.
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For agents and adjusters, that string of red and yellow tags is the coverage conversation nobody wants to have after the fact. United Policyholders' Amy Bach has been telling homeowners to price out flood cover and, budget allowing, buy it. Wind-driven wave damage, storm surge and coastal flooding are excluded from many standard homeowners' policies, and the California FAIR Plan doesn't cover storm-related damage either unless the policyholder has separately bought a difference-in-conditions (DIC) policy, according to the California Department of Insurance.
Actual flood protection has to come from the National Flood Insurance Program or a private flood carrier, and NFIP policies take 30 days to go into effect. The window to buy is now, not once a storm has a name.
This storm cycle is going to hit a market that's already been through two years of record wildfire losses. Private carriers have tightened underwriting and non-renewed policies well beyond the wildland-urban interface, pushing more homeowners toward the FAIR Plan and a surplus lines market that topped 300,000 homeowners policies for the first time in 2025.
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That leaves the FAIR Plan, already stretched by fire risk, as the default option for many coastal homeowners right when its coverage is least useful for what's actually threatening their homes. On top of that, the California Department of Insurance approved a 29.1% average rate increase for FAIR Plan dwelling policies, down from the 35.8% originally requested, effective on new and renewal business starting October 15 which is the largest single-year increase in the plan's history, landing right as storm season gets underway.
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Federal forecasters now put the odds of this El Niño becoming "very strong" during the last three months of 2026 at 98%, with a 75% chance it ends up stronger than any event since record-keeping began in 1950. Those figures are cited in the governor's emergency proclamation and show up independently in industry loss-reporting this month.
They've climbed steadily over the summer as sea surface temperatures in the eastern Pacific ran hotter than expected. NOAA's Climate Prediction Center had the "very strong" odds above 90% as recently as early September. They could move again before winter peaks, so it's worth checking the latest CPC bulletin before using these numbers in client materials.
For insurers and reinsurers, a Super El Niño reshuffles catastrophe exposure globally. It tends to quiet Atlantic hurricane activity while loading risk onto the eastern Pacific, wildfire-prone regions and inland flood zones.
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CPC forecasters are careful to say a stronger El Niño raises the odds of impacts without making any single storm a certainty. But California's market is already absorbing a record rate hike and the tail end of a brutal wildfire cycle, and now has a governor's emergency order and a record-strength ocean pattern arriving at the same time. FAIR Plan pricing changes October 15. NFIP's 30-day wait is already eating into the calendar. The DIC and flood conversations are worth having this week.
