An ordinarily sleepy California office has become the site of one of the state’s most exciting races. Next week, voters will decide between two Democrats vying to become the Golden State’s next Insurance Commissioner. In doing so, they’ll be choosing between two competing visions of how to regulate an industry that has surged to the forefront of politics in a part of the country that’s been devastated by a drumbeat of climate-fueled wildfires and floods. Both candidates pitch themselves as reformers, but the nature of the reforms they’re proposing is very different. One wants to make the state’s troubled insurance market more functional and strengthen consumer protections. The other wants to change the very structure of how that market operates, and give the public a much greater say in deciding how Californians get insurance and plan for the future.
While a race for insurance commissioner may seem at first glance to be mainly of local importance, this election could have implications well beyond California, the world’s third largest insurance market. In two-thirds of counties across the United States, home insurance now costs more than property taxes. Over the last several years, the rise in the average cost of home insurance—a necessity for receiving a federally backed mortgage—has been triple the rate of inflation, swelling by 46 percent since 2021. And one of the country’s top affordability issues is also a climate issue. Major insurers have fled neighborhoods and even whole states where they’ve had to make massive payouts as a result of hurricanes, flooding, and wildfires, leaving public officials to erect privately operated insurers of last resort that take on the kinds of risky policies companies don’t want on their books. Rates for California’s insurer of last resort, the FAIR Plan—now consisting of nearly 700,000 dwelling and commercial policies—rose by an average of 29.1 percent earlier this month; enrollment in the FAIR Plan has swelled by more than 157 percent since September 2022, from 2 to roughly 5 percent of the state’s single-family households.
To address this sorry state of affairs, state legislator Ben Allen—who currently represents the Pacific Palisades—is pitching reforms to the state’s rate-setting process; expanding grants that would make it easier for homeowners, businesses owners, and neighborhoods to protect their properties against wildfires; and bringing insurers back into the high-risk areas they’ve fled over the past several years. Former San Francisco Supervisor Jane Kim, meanwhile—the top vote getter in the June 2 primary—is proposing an ambitious, publicly run “single payer” disaster insurance program that is noticeably rattling the insurance industry. But for Kim, desperate times call for desperate measures. “Right now California and many states are in a situation where we have two choices: we either let them raise rates, or they leave California, or threaten to,” she said. “That’s not a healthy market. That’s a hostage situation.”
As households pay more, she points out, insurers have collected tidy profits. Nationwide, property and casualty insurers last year enjoyed their most profitable underwriting year in over two decades. Insurers’ underwriting income—what’s left over from premiums after operating expenses and pay outs on claims—surged from $24.3 billion in 2024 to $68.7 billion in 2025. Insurance companies last year also earned $111.6 billion from investing premium income. For insurers, their business model worked as intended: a less intense disaster season for the rest of the country in 2025 helped balance out catastrophic losses from California’s destructive Palisades and Eaton fires. Insured losses from those events reached $37.5 billion, and insurance companies still had nearly $1.27 trillion in reserves. The cost of homeowners’ insurance in California, meanwhile, jumped by 21 percent. “Instead of actually addressing risk or trying to mitigate risk to make a portfolio safer,” Kim told me, “what they’ve figured out is how to make more money than ever before despite growing risk.”
Insurance is regulated at the state level, and California is one of just 11 states that elects insurance commissioners. Kim hopes to leverage what she sees as an underutilized power of the office: its ability to license companies’ ability to operate. Her campaign has, for instance, proposed mandating that companies that want to sell Californians auto insurance—reliably profitable policies—must also offer home insurance. Her proposed nonprofit, public disaster insurer—which would require legislative approval—would be financed by a levy on insurers, collecting some of the income from premiums Californians are already paying. Like private providers, a public disaster insurer would invest income from premiums and buy reinsurance—i.e. insurance for insurers—while guaranteeing disaster insurance for all.
The proposal seems radical only insofar as it challenges an arguably more extreme consensus: that a handful of for-profit companies’ pricing decisions should decide how society plans for the climate crisis. While there are certainly details to be worked out, Kim’s concept for nonprofit, state-run disaster insurance would be a means of allowing California to do more of that planning and prep work in-house and at scale. Although a series of state-level policies have sought to incentivize households and businesses to invest in hardening their properties against flooding and wildfire risk—through grants and state-mandated discounts on premiums—a public disaster insurer would let the state to reinvest what would constitute profits and executive for private insurers directly into mitigation. “We would take excess capital and drive it back to communities in the form of fire and flood mitigation,” Kim said. “The only way to make insurance affordable in the long run and reduce risk.”
Unlike most insurers, Kim added, a state-run disaster insurer wouldn’t invest in fossil fuel companies whose products are helping intensify storms and wildfires. Along similar lines, Allen’s would require insurers to be transparent about their fossil fuel investments. Kim’s program also includes a range of smaller-scale consumer protections, like stopping insurers from raising rates after a claim is filed; charging insurers interest on delayed pay-outs; tackling price discrimination in auto insurance; and scrutinizing insurers’ definition of the “reasonable profit” they’re permitted to factor into proposed rate hikes.
The high stakes of the California insurance commissioner race is apparent in the money pouring into it. Some $6 million have now flowed in across the primary and general. Kim and Allen have both agreed not to accept donations from industries that stand to be impacted by the insurance commissioner’s decisions, including insurance companies. But the nonprofit newsroom CalMatters reported on Monday that a number of political action committees, or PACs—including some funded by insurance industry interests—have spent roughly $3.2 million to support Allen’s campaign and $1.5 million opposing Kim. Allen has been clear that he hasn’t courted these donations. As he told CalMatters, “I didn’t ask for this and don’t welcome it.” Election law prohibits coordination between candidates’ campaigns and PACs. Unlike donations made directly to campaigns, that is, candidates aren’t able to return funds donated to independent spenders.
Although relatively small amounts of spending in the race are coming from the insurance industry, the list of donors lining up against Kim seem to suggest that major business interests in California see the contest as important for reasons that reach beyond insurance. A win for Kim—who’s been endorsed by Bernie Sanders—could be a bellwether for progressives’ broader ability to tap into populist outrage over how one of the country’s most important and inscrutable industries makes its money. CalMatters detailed the PACs wading into the race. Major insurers like State Farm have largely stayed out. Three bail bonds insurers made one $10,000 each to a PAC supporting Allen, which also took in $9,500 from “an industry that appears to be connected to the bail bonds industry” (per CalMatters) and $48,000 from a health insurance PAC. The biggest spender in the race is a super PAC called Californians for an Affordable Future, which has devoted all of its $2.1 million in spending to baking Allen. The group is funded overwhelmingly by crypto billionaire Chris Larsen, a prolific political donor nationally and in California, where he’s spent roughly $12 million to oppose the state’s proposed billionaire wealth tax. JOBSPAC has spent roughly a quarter of its total spending on the Insurance Commissioner race, having so far contributed $1.51 billion. Sponsored by the Chamber of Commerce, the group’s major funders include Meta, Google, and its founder Sergey Brin, as well as several investor-owned electric utilities, including PG&E and Edison International. Other major donors to pro Allen PACs include the California Association of Realtors and the California Business Roundtable.
The monied interests on Kim’s side are decidedly more modest. Her main outside spending support has come from the California Working Families Party, where she served as executive director before deciding to run for the office. The group has poured $607,000 into the race, accounting for roughly 70 percent of its total spending this cycle. Its largest donors are the wife of Netflix co-founder Reed Hastings; real estate developers Wayne Jordan and Quinn Delaney; and labor unions including the California Nurses Association and the state council of the Service Employees International Union.
California is certainly unique. But states around the country are grappling with similar problems: ballooning premiums; private insurers that cherry-pick the most profitable policies, offloading riskier properties onto poorly managed insurers of last resort; and a for-profit sector that’s fundamentally ill-equipped to undertake the kinds of planning required to navigate the climate crisis. Rising temperatures promise radical changes to just about every sector of the economy. The question isn’t whether insurance will be upended, but who gets to write the rules of how to weather the future.
