California is going through an insurance crisis, largely due to the effects of natural disasters and climate change. Catastrophic weather events, higher construction costs, global inflation, and greater reinsurance premiums have pushed insurers to limit exposure or withdraw from the market completely.  

Two of the state's largest insurance carriers, which represent over 27% of the admitted insurance market in California, and other insurers, announced they would stop issuing homeowners and commercial property policies in California. Over the past 10 years, homeowners insurance companies have performed much worse in California compared to the rest of the country. Over that time, they have a direct underwriting profit of 3.6% countrywide, compared to -13.1% in California.

On September 21, 2023, California Governor Gavin Newsom issued an executive order regarding these climatic changes and events and their effect on the insurance industry, stating that climate change has resulted in more frequent wildfires of greater intensity, and has also increased the occurrence and severity of winter storms. These extreme weather events have contributed to billions of dollars in insurance rate increases in the California market.