‘Resilience is a global responsibility’: Commissioner Lara moves to safeguard Californians’ financial future from future insurance crises

News: 2026 Press Release

LOS ANGELES — Strengthening oversight to protect Californians’ financial futures, Insurance Commissioner Ricardo Lara announced a public hearing on a new Long-Term Solvency Planning Regulation for the nation’s largest insurance market. The regulation will help the California Department of Insurance keep insurance available despite natural catastrophes and technological changes that are emerging today and whose scope will expand in future years.

“The last decade has taught insurance regulators a hard truth: Resilience is not optional, it is a global responsibility,” said Commissioner Lara. “California’s go-it-alone approach on insurance hasn’t served consumers effectively in the past. This regulation embodies our hard-earned insights along with our international regulatory colleagues about the challenges from AI and climate change. Insurance is critical to every part of our economy, so a forward-thinking approach minimizing the risk of sudden disruptions in the insurance market makes every Californian more secure.”

Confidential financial oversight of insurance companies is a core function of the California Department of Insurance’s consumer protection mission, similar to the U.S. Federal Reserve for U.S. banks. The Long-Term Solvency Planning Regulation would require insurance companies to assemble individualized information on risk mitigation for protecting their solvency, allowing the Department’s experts to analyze their planning for 2030, 2040, and 2050. This forward-thinking approach — the first such regulation for any U.S. state — enhances the financial security of the state's policyholders and minimizes the risk of sudden disruptions in the insurance market, as well as broader systemic risks to California’s economy. Commissioner Lara released new draft regulatory text in advance of the Department’s virtual public hearing on July 28.

The Long-Term Solvency Planning Regulation has won praise from leading U.S. and international experts and financial regulators.

“With climate change escalating the risks of weather-related extreme events and new technology bringing uncertainty to markets, long-term planning by insurance regulators is needed,” said Carolyn Kousky, Associate Vice President, Economics and Policy Analysis, at Environmental Defense Fund. “In order to preserve market stability, we must think longer term about the impacts of growing risks and the investments being made to mitigate them. To prevent surprises that can harm consumers, we need to be planning for a future that will look different from our past.”

“Insurer risk and transition plans are a critical step to better prepare insurers, their customers, and other stakeholders for the quickly changing future,” said Steven M. Rothstein, Ceres' Chief Program Officer. “The California regulatory process is a critical milestone, and Commissioner Lara and his team deserve credit for their forward-looking approach to ensure insurers are strategically planning and key stakeholders have the information they need.”

“Managing climate risk is part and parcel of good risk management and of disaster risk reduction—but the past alone is not a reliable indicator of the future. This is why it is essential for insurers to assess different climate futures and their implications for their underwriting and investment portfolios,” said Butch Bacani, Head of Insurance at the UN Environment Programme and Chair of the UN Forum for Insurance Transition. “By insuring and investing with foresight, insurers are better positioned to enhance long-term business resilience and company value, close the protection gap, contribute to financial stability, and support the transition to safer, more resilient and sustainable communities and economies.”

“Scenario analysis is a critical risk management tool for navigating uncertainty,” said Dr. Sean Carmody, former Executive Director, Policy and Advice Division of the Australian Prudential Regulation Authority, the country’s insurance regulator. “It helps institutions anticipate and prepare for emerging risks—such as the impact of a changing climate and rapid technological innovation—by exploring a range of plausible futures and identifying areas of vulnerability and strategies that can strengthen resilience in the financial system.”

“This is about giving Californians confidence that their coverage will be there when they need it most,” said Commissioner Lara. “Strong oversight means asking the right questions, demanding real answers, and following the data, not just for today but for the decades ahead.”

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Media Notes:

• The Department of Insurance will hold a virtual public hearing on the Long-Term Solvency Planning Regulation on July 28, 2026. View the regulatory documents below for more information and to learn how to participate. 
• Notice of Hearing
• Text of Regulation
• Initial Statement of Reasons