California’s insurance reforms: What they mean for agents and clients

California is pushing for greater transparency in its insurance market. Its reforms give consumers more insight into who participates in rate proceedings and what expenses they seek to recover.

“More visibility can help advisors explain rate increases with confidence and provide additional context around carrier decisions,” said Shannon Stamps, western division leader at World Insurance Associates.

Beyond understanding premiums, policyholders need ways to maintain coverage.

For this reason, the state is also taking steps to help homeowners keep their policies. SB 1301 is a new law signed in September that will take effect in January 2028. It extends advance notice requirements for certain nonrenewals and also provides eligible homeowners with more time to address insurers’ concerns before their coverage ends.

For advisors, these changes underscore the importance of helping clients understand rising premiums, navigate coverage options, and make informed decisions in a challenging insurance market.

Giving clients more context

Agents should help clients understand that rates are driven by long-term loss trends, not a single event. Inflation, wildfire risk, rebuilding costs, reinsurance, auto repair costs, and insurance-to-value adjustments, for example, have all put pressure on pricing.

“More importantly, clients must recognize that their premium is based on the future cost to insure the risk, rather than their personal claims history alone,” Stamps said.

A client could have a perfectly clean record and still see a significant hike because the overall cost of providing insurance has changed.

That being said, most clients care more about practical outcomes than the mechanics of a rate filing. They want to know whether coverage is available, affordable, and appropriate for their specific needs.

To support clients and earn their trust, agents need to clearly explain market conditions, present options and help them make informed decisions.

“More data does not automatically create more trust. Clear advice does,” Stamps explained.

For example, a consumer may focus on a rate increase without understanding the underlying loss experience, catastrophic risk, or cost of capital supporting it.

The value of proactive advice

While premiums are a piece of the insurance conversation, they’re not everything. The strategy is what’s truly important.

“The best advisors are proactively setting expectations before renewal, educating clients throughout the year, and helping them understand the tradeoffs between price, coverage, carrier stability, and availability,” Stamps explained.

Clients cannot control broader market conditions, but they can control how they manage risk, maintain their property, and structure their coverage.

They should also understand when it makes sense to file a claim.

“Clients aren’t always familiar with the claims process or may not realize that filing a claim doesn't guarantee a payment,” said Jennifer Taylor, public adjuster and CEO of Claim Ready.

Sometimes, they file a claim for damage that falls below their deductible and end up with a denial. Then, they file another claim hoping for a different outcome. That client may end up with multiple claims on their record, no payouts, and potentially higher premiums.

Helping clients understand these trade-offs is part of the broader advisory role.

“Today's clients need an advisor, not a messenger delivering bad news,” Stamps said.

The agents who succeed are the ones who provide perspective, present options, and help clients make proactive decisions before challenges arise.

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Anna Baluch is a finance reporter and writer with more than a decade of experience. Contact her at anna.baluch@innfeedback.com