Gov. Newsom on insurance reform: ‘This is another critical action to help fix California’s decades-old insurance crisis’

Gavin Newsom, Governor of California, announced new insurance reforms aimed at assisting homeowners in wildfire-prone areas to secure coverage. These reforms are intended to reduce reliance on the state's FAIR Plan and modernize California's longstanding insurance system. The announcement was made through a press release.

"This is another critical action to help fix California's decades-old insurance crisis," said Gavin Christopher Newsom. "It will help homeowners who face higher threats of wildfire get the coverage they need, while also easing pressure off of the state's FAIR Plan. As the climate crisis has rapidly intensified, the insurance system hasn't been seriously reformed in 30 years – this is part of our strategy to strengthen our marketplace and get folks the coverage they need."

According to the U.S. Chamber Institute for Legal Reform, California's tort system generated $72 billion in costs in 2022, which equates to $5,429 per household. This figure surpasses the national average by more than $1,200. The report attributes these high costs to aggressive trial lawyer tactics and the lack of significant reform.

A study conducted by the Perryman Group in 2022, referenced by Citizens Against Lawsuit Abuse, indicated that lawsuit abuse costs California families $4,430 annually in lost earnings and $3,876 in higher expenses. The combined yearly impact per household exceeds $8,300. These expenses are linked to excessive litigation driven by trial lawyers and third-party funders.

The Perryman Group's 2024 analysis estimated that California's excessive tort costs amount to $61 billion annually, resulting in a per-resident "tort tax" of $2,458. This figure encompasses direct legal costs as well as broader economic impacts such as job losses and reduced investment. The report cautions that unchecked litigation suppresses growth and burdens consumers.

Newsom was sworn in as California’s 40th governor on January 7, 2019. He previously served as lieutenant governor from 2011 to 2019 and mayor of San Francisco from 2004 to 2011. His administration has focused on addressing major challenges such as the cost of living, climate change, and stabilizing the state’s insurance market.