In 2024, the most significant development in California’s excess and surplus insurance market occurred in the area of homeowners’ coverage, a new IB+ report finds.
As major admitted carriers such as Farmers, Allstate, and State Farm withdrew from the market and began canceling existing homeowners’ policies, the surplus lines market – traditionally reserved for specialized or higher-risk placements – has increasingly taken on standard residential risks.
“Surplus lines insurers are now issuing policies at a volume rarely seen in this segment,” says Michael Caturegli, chief analysis and technology officer at the Surplus Lines Association of California.
“The availability of homeowners’ insurance is decreasing,” Caturegli adds. “So, with a number of large traditional admitted insurers not writing new policies and canceling existing ones, the availability is now limited to a narrower group of insurers.”
These findings are part of a new IB+ report that analyzes key aspects of California’s surplus lines market, including:
In 2024, premiums for the surplus lines sector totaled $19.1 billion, up from $16.6 billion in 2023. The increase in homeowners’ policies contributed to this notable surge. Through the third quarter of 2024, the Surplus Lines Association recorded a 330 percent increase in homeowners policy transactions and a 169 percent jump in premiums.
Homeowners’ policies have largely fallen under the personal lines subsector, which saw significant growth in 2024, with premiums rising by 67.6 percent and transactions increasing by 101.9 percent.
This isn’t a surprise to those watching California’s growing exposure to natural catastrophes. For years, wildfires have plagued the state. More recently, flooding and other severe weather events have added new layers of complexity to underwriting residential property.
“There’s a bit of a challenge with homeowners' insurance for homeowners in California because of the wildfire risk and then, increasingly, with floods and some of the other natural catastrophes,” Caturegli explains.
With customers having limited choices for homeowners’ insurance, many are turning to the California FAIR Plan, the state’s insurer of last resort. But even the FAIR Plan is being pushed to capacity.
Caturegli says, “We work closely with the fair plan as well, and they also have seen a really large spike in policies and their own homeowners.”
This surge into non-admitted and last-resort options reveals the depth of the current instability. Surplus lines were never intended to be a safety net for middle-class homeowners with ordinary coverage needs. Yet, that’s where the market is heading.
For now, the data points in one direction: as admitted insurers exit, the surplus lines market is left to clean up the mess – and California homeowners are stuck navigating a coverage landscape that’s more unstable than ever.
A full, in-depth analysis of this shift, alongside comprehensive data about the California surplus lines market, can be found in the California Surplus Lines Market Outlook report.
