California’s Insurance Crisis: Could Prop 103 Be on the Chopping Block?
California’s home insurance market is in trouble. Policies are vanishing. Prices are skyrocketing. And now, a group of insurance industry representatives is pointing fingers at Proposition 103, a decades-old law they say is making things worse. Their solution? A ballot initiative to change it.
But what does this mean for you? Let’s break it down.
What’s Prop 103, Anyway?
Proposition 103 isn’t new. It’s been around since 1988, passed by voters to regulate California’s insurance industry. It does a few key things:
- Insurance companies need state approval before raising rates.
- Consumer groups can step in and challenge rate hikes.
- The state’s insurance commissioner is elected, not appointed.
Sounds good, right? It’s saved Californians billions of dollars over the years, according to its supporters. But critics say it’s outdated and causing more harm than good.
Why Now?
California’s insurance market is in crisis. Homeowners are struggling to find affordable policies—or any policies at all. Some insurers are pulling out of the state entirely.
The industry says Prop 103 is partly to blame. They argue it’s kept rates artificially low for decades, making it unprofitable to do business here.
Sam Sorich, vice president of legislative affairs with the Western Insurance Agents Association, didn’t mince words: “Proposition 103 should be reformed or repealed. It doesn’t meet consumer needs. It’s created a disastrous insurance market.”
What’s the Industry Proposing?
The idea is to put a ballot initiative in front of voters in 2026. One potential change? Removing the phrase “furthers its purpose” from Prop 103.
Why does that matter? Right now, lawmakers can only tweak Prop 103 if the changes align with its original intent. Critics say this language ties their hands. Removing it could open the door for broader reforms—or even a complete overhaul.
But it’s not a simple fix. “It would no doubt require an expensive campaign,” Sorich admitted. “And there’s no guarantee lawmakers would make positive changes.”
What About Consumers?
Not everyone’s on board with these changes. Harvey Rosenfield, the author of Prop 103, says the law has been a lifeline for Californians.
“Proposition 103 has saved people $154 billion on auto insurance alone,” he said. “It’s protected people against price-gouging. It’s empowered the public to hold insurance companies accountable.”
Rosenfield believes voters won’t fall for what he calls a “power grab” by the insurance industry. “There’s a reason Prop 103 passed in the first place,” he said. “People were sick and tired of being ripped off.”
What’s at Stake?
For consumers, the stakes are high. If Prop 103 is weakened, insurance companies could have more freedom to raise rates. That might make policies more available—but also more expensive.
For the industry, it’s about survival. They argue that without changes, more companies will leave California, making the crisis even worse.
So, who’s right? It depends on your perspective.
What Happens Next?
If the industry moves forward, they’ll need to gather enough signatures to get the initiative on the 2026 ballot. Then, it’s up to voters to decide.
In the meantime, Californians are stuck in the middle. Homeowners are scrambling for coverage. Renters are feeling the pinch. And everyone’s wondering: Is there a better way?
The Bottom Line
This isn’t just about insurance. It’s about trust. Do you trust the industry to fix the problem? Or do you trust Prop 103 to keep them in check?
One thing’s for sure: The debate isn’t going away anytime soon.
(This article is based on reporting from ABC10.)