In terms of the insurance industry at least, California isn’t too far out of the ordinary compared in terms of bureaucracy and red tape (especially compared to, say, some eastern states with powerful and aggressive regulators such as NY or MA).

Of course, the judicial environment is separate from the regulatory apparatus, and it seems eminently plausible that CA courts are much more willing to protect consumers from bad faith claims practices, etc.

That all being said, catastrophic[1] wilfdire claims are a huge problem in the P&C insurance industry because they make the actuarial math much more difficult, and CA has had quite a few over the past couple years. Where I live in CO, none of the well-known insurers will, as a rule, write home policies in the mountain regions for similar reasons in spite of the relatively friendly regulatory environment.

[1] a term with a rather precise meaning in insurance, referring to a single event which causes a large number of expensive and highly correlated claims