CALIFORNIA: An Introduction to Insurance: Insurer

California Insurance Trends in 2024 

In 2024, technological, economic, and environmental forces continued to drive both the volume and complexity of insurance claims in California. 

A defining trend was the sharp increase in cyber-related claims, particularly ransomware on healthcare organizations, municipalities, and other essential sectors. The frequency and sophistication of these incidents grew substantially, fuelled by AI-generated deepfakes and social engineering tactics. D&O insurers also saw increased exposure tied to cybersecurity governance failures, particularly in the tech and healthcare sectors. 

Claims involving wrongful data collection also surged, as consumers and regulators scrutinized the use of tracking technologies like pixels, cookies, and SDKs. Many insurers have since limited or excluded coverage for pixels and biometrics. In parallel, AI-related claims emerged more forcefully, with California’s tech industry drawing particular focus and heightened regulatory scrutiny on insurers utilizing AI in underwriting and claims handling. 

On the property side, commercial insurers faced increased losses from extreme weather events, including damaging Southern California wildfires and flooding. This uptick in climate-related losses intensified debate over the viability of writing property coverage in high-risk regions. 

As insurers, policyholders, and brokers grapple with these pressures, the demand for experienced coverage counsel has only grown. 

Cyber claims reach new heights 

Cyber risk remained the most dynamic and volatile insurance trend in 2024: 

• The global cyber insurance market is projected to reach USD29 billion by 2027, doubling from 2023. 
• U.S. cyber scams generated more than USD16.6 billion in losses in 2024, a 33% increase year-over-year. 
• Ransomware attacks on critical infrastructure rose 9%, with over 3,150 incidents reported. 
• A Fortune 50 company reportedly paid a record USD75 million ransom to the Dark Angels group. 

Healthcare and public entities were especially vulnerable, due to older systems and the high value of operational continuity. This escalation in cyber threats coincided with the tragic shooting of UnitedHealthcare CEO Brian Thompson in December 2024. The incident highlighted the growing public frustration with the healthcare industry, leading to a complex interplay between cybercriminal activities and societal discontent. 

AI has supercharged threat actors capabilities. Because threat actors exploits are constantly evolving, so too do cyber policies. These new added coverages make interpretation challenging and unpredictable. Coming years will push coverage lawyers in California to be educated on technology, the digital ecosystems, and cyber coverage issues. 

California privacy litigation expands 

California remains ground zero for privacy litigation. Plaintiffs are targeting emerging website advertising and analytic features (pixels, cookies, session replay, chat, and SDKs) under evolving statutory privacy protections. The Ninth Circuit’s decision in Briskin v. Shopify has potential to reshape personal jurisdiction, allowing plaintiffs to sue out-of-state tech companies if their tools are used in California. 

A wide variety of plaintiff firms have joined the fray, each digging their own niche: eg, attacking imperfect privacy policies, privacy securities suits after a data breach, or suits tracking negative press targeting large technology companies. Software vendors, such as those from Silicon Valley, are frequent targets due to the potential for enormous statutory damages and the distrust of large technology companies. In 2024, SDKs received increased attention, with plaintiffs targeting SDKs in mobile apps, especially apps used by children.  

Because of the significant liability profile, many companies look to insurance, but insurance does not typically cover intentional business practices, wrongful collection, and wiretapping. 

Artificial intelligence liability becomes real 

In 2024, the risks from AI moved from hypothetical to tangible. OpenAI and Microsoft faced multiple lawsuits alleging unauthorized use of copyrighted content to train generative AI models like ChatGPT. News organizations, including The New York Times, filed high-profile claims seeking damages and public accountability. The U.S. Copyright Office has expressed concerns that AI-generated outputs may violate the fair-use doctrine, particularly where they compete with original creators. 

On the regulatory front, California enacted Assembly Bill 2013, requiring developers of generative AI to disclose their data sources. However, Governor Gavin Newsom vetoed a more sweeping measure (Senate Bill 1047) aimed at regulating foundational models. 

Meanwhile, civil rights litigation gained traction. Cases alleged discriminatory outcomes from AI use in employment decisions, insurance underwriting, education access, and law enforcement. These cases raise issues that touch nearly every line of coverage.  

The rapid advancement of AI technology presents challenges for existing insurance frameworks. Traditional E&O or cyber policies may not adequately cover liabilities arising from AI-related incidents, such as computational errors or copyright infringement suits. 

Environmental risks and wildfire fallout 

Wildfires and environmental disasters placed California’s property insurance market under extreme strain in 2024 and 2025. Major carriers including State Farm and Allstate pulled back or halted new policies entirely, citing growing losses and surging reinsurance costs. 

Thousands of homeowners were forced into the surplus lines market. In response, Insurance Commissioner Ricardo Lara expanded moratoriums on policy non-renewals in affected ZIP codes and advanced new catastrophe modelling rules requiring insurers to factor in wildfire mitigation efforts when assessing risk. 

Beyond climate change, other cost drivers – nuclear verdicts, inflation, supply chain issues, and Proposition 103’s rate approval process – have all compounded the state’s insurance crisis. While regulators attempt to balance consumer protection with insurer sustainability, the market remains fragile. 

Relief may be in sight to open the market and attract new coverage: On May 12, 2025, State Farm won an administrative trial to achieve a first-ever emergency rate hike in California. 

Class actions continue to pressure liability lines 

Nationwide, class actions remain a persistent and expensive source of risk. Early waves of litigation over opioids and talc have given way to newer suits targeting CPAP devices, hernia mesh implants, and other consumer and medical products. As traditional coverage layers erode, plaintiffs increasingly pursue novel liability theories and seek to rope in additional defendants with viable insurance coverage. 

Emerging trends in California and beyond include the following.

• Climate liability lawsuits, targeting large corporate emitters. 
• Greenwashing claims, where plaintiffs challenge companies’ environmental marketing under consumer protection theories. These claims raise coverage issues with “failure to conform” exclusions. 
• Civil rights-based product suits, including those related to hair relaxers and chemical dyes. 

These cases cut across policy lines. As theories expand, insurers face increased pressure on both claims and underwriting. 

Conclusion 

California’s insurance market is under historic pressure. In response to the wildfires and other systemic risk, some insurers have decided to leave California altogether. But California, a leader in innovation, is at the forefront of insurance developments, and insurance professionals will need to follow with a keen eye, no matter where they are located. Commentators focus on the surge of new technology, AI, cyber threats, and legal frameworks. Is it too soon to talk about quantum computing?