It’s regulated, not illegal.

“Experts say the insurance landscape in California is particularly tricky because, in addition to the wildfire risk, the state has a law that adds extra approval measures, including board approval and review by the insurance commissioner, if an insurance company wants to raise the rate of insurance by more than 7%. That’s been in effect since the 1980s.” https://www.cnbc.com/2024/02/05/what-homeowners-need-to-know...

Illegal seems fine as shorthand though. Same with housing -- "illegal" to build in many instances. Not technically illegal of course, but enough hurdles makes it effectively so.

If it's not permitted to raise the price of premiums to point where it covers the actual risk, then it's de facto illegal. Nobody will sell insurance policies at a loss.