Newsom signs executive order on disaster recovery and insurance amid climate impacts

Governor Gavin Newsom has signed an executive order aimed at accelerating California’s response to the economic and insurance challenges caused by the climate crisis. The order directs state agencies to collaborate on research and recommendations for long-term solutions to manage the costs of natural disasters, stabilize the insurance market and energy utility sector, make insurance more affordable, protect ratepayers, and ensure compensation for wildfire survivors.

The executive order follows Newsom’s signing of SB 254 (Becker), which establishes a new phase of the state’s Wildfire Fund. This fund is designed to support wildfire survivors and shield ratepayers from high utility liability costs. SB 254 also requires the state’s wildfire fund administrator to produce a report by April 2026 analyzing new approaches to catastrophe response, including wildfires. The executive order accelerates this analysis process.

“There’s no Republican or Democrat thermometer – red and blue states alike, and countries around the world, are facing this climate-fueled insurance crisis. And California is taking action. Already, we’ve seen positive action to stabilize our home insurance market as insurers submit plans to write policies in areas where Californians have been running out of options. We’re taking a whole-of-government response to protect Californians from wildfire while boosting coverage options and bringing down costs,” said Governor Gavin Newsom.

The California Earthquake Authority (CEA), acting as the Wildfire Fund Administrator, will lead an evaluation of reforms for California’s energy utility and insurance markets as risks from natural catastrophes grow. CEA will work with other state agencies on this study and has invited stakeholders with expertise in natural catastrophe resiliency to contribute.

Former Cabinet Secretary Ann Patterson will participate in this process as she joins Stanford Doerr School of Sustainability's Woods Institute for Environment and Sustainability Accelerator as a Policy Scholar.

In 2023, Governor Newsom issued an executive order urging Insurance Commissioner Ricardo Lara to address longstanding issues in the insurance market that have been made worse by climate change. This led to the creation of the Sustainable Insurance Strategy—a set of reforms intended to strengthen California’s marketplace while maintaining consumer protections.

Newsom has supported regulatory actions requiring insurers using new catastrophe models to offer more policies in distressed areas. The Department of Insurance recently completed its review of three advanced wildfire catastrophe models, supporting implementation of these reforms.

Although home insurance rates have risen due to climate-related threats, they remain lower than national averages in California.

California continues efforts toward reducing pollution while growing its economy. Since 2000, greenhouse gas emissions have dropped by 20%, even as GDP rose by 78%. In 2023, two-thirds of California's electricity came from clean energy sources—the highest share among large economies worldwide—and battery storage capacity has increased significantly since Governor Newsom took office.