On his X account, California gubernatorial candidate Xavier Becerra (@XavierBecerra) recently said that, as governor, he would immediately freeze “home insurance premiums while the state investigates long-term solutions to bring these costs under control.” This statement not only ignores binding constitutional law to the contrary, it is bad policy that would make the situation worse.
Unconstitutional rate freeze
We have been down the road of unconstitutional rate freezes before. In 1988, voters passed Proposition 103, a ballot measure to regulate auto and home insurance. The measure included a one-year freeze on insurance rate increases unless an insurer was “substantially threatened with insolvency.”
The California Supreme Court, in Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805, ruled that the measure’s rate freeze was confiscatory and in violation of the 5th and 14th amendments to the United States constitution because it failed to provide insurers with a “reasonable rate of return.”
Dating back to 1944, the United States Supreme Court stated quite clearly that no government is permitted to regulate rates in a manner designed to push companies to the brink of bankruptcy.
No emergency powers for long-term, chronic situations
In the Calfarm case, the proponents of the rate freeze unsuccessfully argued that the existence of an auto insurance emergency, with high prices, justified the state’s exercise of emergency powers that would result in unconstitutionally low rates.
The California Supreme Court noted that short-term emergencies can, in narrow circumstances, justify temporary price controls that prevent fair returns, citing rent-control cases from World Wars 1 and 2.
But, the Court stated that “to justify a measure which deprives persons of a fair return, however, an emergency would have to be a temporary situation of such enormity that all individuals might reasonably be required to make sacrifices for the common weal.”
The Court found that the 1980’s insurance affordability problems were chronic, not fleeting, and rejected the use of emergency powers.
Today’s property insurance problems are, likewise, chronic.
The Insurance Commissioner reviews rates, not the governor
Proposition 103 delegates the power to review property insurance rates to the independently elected Insurance Commissioner, who does not report to the governor. No case, including Calfarm, has given the governor a back-door emergency override of the Insurance Commissioner’s powers to regulate rates.
Where to go from here
A more helpful statement for candidate Becerra to make would be to highlight why the property insurance market has spiraled over a long period of time and the solutions that could fix the situation. For years, the state of California (CDI) failed to allow rate increases that reflect the actual risks of insuring property in a hotter, dryer California. Recent reforms by the CDI acknowledge this history. In July, 2025, the CDI finalized its “Sustainable Insurance Strategy” to modernize insurance regulations and encourage property insurers to return to market. In the short period of time since the CDI finalized its strategy, over 40% of the property insurance market has made new filings, not including today’s news that Travelers Insurance has a forthcoming new filing.
There are other signals that the property insurance market is improving. Over the last six months, the California Fair Plan has grown at a substantially lower rate than the previous two years. And, this is before the latest Sustainable Insurance Strategy filings have even hit the market.
It is time to “do no harm.” An unconstitutional rate freeze is only going to push the market in the other, wrong direction.
Rex Frazier serves as president of the Personal Insurance Federation of California