President Donald Trump has called for reforms to California's legal system, including the implementation of a "loser pays" policy aimed at reducing frivolous lawsuits and addressing the departure of insurance companies from the state. His remarks were made in a YouTube video posted on January 31 by Protecting American Consumers Together.
"Every insurance company in the country left California. That's why you have no insurance," said Trump, 45th and 47th U.S. President, according to YouTube. "You lost your insurance company 6 months ago because the state wouldn't give them what they had to have."
According to the National Association of Insurance Commissioners (NAIC), California's insurance market has been challenged by litigation and regulatory factors. The 2019 McHugh Decision by the California Supreme Court expanded insurers' liabilities in bad faith claims, resulting in estimated liabilities of up to $22.4 billion for insurers. This situation highlights the need for collaboration among insurers, regulators, and policymakers to adapt to the evolving legal environment and maintain market stability.
Legal system abuse imposes a financial burden on consumers and small businesses across the United States. In 2021, U.S. commercial liability costs reached $347 billion, marking a 19% increase from the previous year. Small businesses—those with annual revenues of $10 million or less—bore nearly half of this amount, totaling $160 billion. This equates to approximately $4,500 per small business, according to data from the Institute for Legal Reform.
FLGov reports that recent legal reforms have contributed to stabilizing insurance rates in Florida. Major insurers such as GEICO, Progressive, and State Farm have filed for rate reductions of 10.5%, 8.1%, and 6%, respectively. Additionally, lawsuits related to auto glass repairs have significantly decreased, dropping from 24,720 in Q2 2023 to just 2,613 in the same period of 2024.
According to The White House, Trump returned to office as the 45th and 47th U.S. president in 2025 with objectives that include advancing border security, fostering economic growth, and strengthening national defense. During his first term, he enacted major tax cuts, trade deals, and military reforms. A Wharton graduate, real estate mogul, and bestselling author, he is also a father of five.
