Hector and Mike examine why 7 of California’s top 12 insurers have paused or restricted new business since 2022, and consumer options seem to shrink daily.
Farmers Direct Property and Casualty
Insurance Co. recently announced plans to end
coverage in California and shift most policyholders to its parent company, Farmers, which already has limited coverage in California.
In May, State Farm announced a freeze on
new policies: https://calmatters.org/housing/2023/05/state-farm-california-insurance/
For years, insurance companies
complained to the California Insurance Commissioner, Richard Lara (https://www.insurance.ca.gov/0500-about-us/01-commissioner/), legislators, and the Governor that current rates and the existing regulations don’t allow them to offset the cost of doing business in the state’s most at-risk regions. Insurance companies point to three main areas:
Wildfire risk, the cost of global reinsurance (the cost of insurance policies that insurance companies take out on themselves), and the increasing cost of construction in California.
So where is everyone going for
insurance: The California FAIR Plan.
As of October, the FAIR Plan had an
exposure of $290 billion, a nearly sixfold increase from the $50 billion of exposure it had in 2018.
