Another Insurance Company Ditches New Policies in California

WLTReport brought you the story last week of how State Farm has had enough of California.

State Farm Has Had Enough of California

State Farm’s general counsel announced they will not accept any more applications from any residents in California.

The move by the insurance company has been decided due to the state becoming a rapidly growing risk zone for wildfires and rising construction costs.

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State Farm isn’t the only major insurance provider who has decided to back away from new policies in California.

Allstate, the fourth-largest insurer in California, will follow the same move as State Farm.

The insurer will halt “sales of property and casualty coverage to new customers in California.”

Like State Farm, Allstate cited wildfires and rising construction costs.

Allstate Drops California; Will Not Write New Insurance Policies Over Wildfires, Construction Costs https://t.co/Mq6BtaXuib

— zerohedge (@zerohedge) June 4, 2023

CBS News reports:

Allstate quietly stopped issuing new policies in California months ago, but didn’t announce the move until Friday. Allstate was the fourth-largest insurer in California, according to the most recent 2021 state data. It earned $4.3 billion in premiums that year and incurred $2.6 billion in losses.

“We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers,” Allstate told CBS News in a statement Friday. “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums.”

In 2021, California experienced at least 7,396 wildfires, which burned nearly 2.6 million acres of land, according to the California Department of Forestry and Fire Protection. The state had an additional 7,490 wildfires that burned 362,455 acres last year.

Gov. @GavinNewsom boats of California being superior in every way to Texas, Florida and other red states, but people fled the state in record numbers, our mismanaged forests burn out of control, and now Allstate has joined State Farm in refusing to insure any additional homes. pic.twitter.com/G9Tp9rPBz9

— Michael Shellenberger (@shellenberger) June 2, 2023

The Los Angeles Times noted that California may be on the verge of a “insurance unavailability crisis.”

The move by the two insurers — State Farm was California’s largest property insurer and Allstate was fourth as of 2021 — could worsen what the FAIR Plan, a state-mandated insurance pool, has called an “impending insurance unavailability crisis.”

“We have a lot of people going naked, which means they have no insurance,” said Bill Dodd, a Democratic state senator representing fire-scarred Napa County and other parts of Northern California. “What my constituents want is insurance.”

The FAIR Plan, which offers minimal coverage at high rates, is meant to be a provider of last resort, but enrollments have surged 70% since 2019 to 272,846 homes in 2022.

A series of catastrophic wildfires in recent years has increased calls from insurers to weaken the state’s consumer-friendly policies that have held down rates for decades.

The average California homeowner’s annual insurance premium is $1,300, compared with more than $2,000 in other states with wildfire risk and $4,000 in hurricane-prone Florida, according to the Insurance Information Institute.

But new home buyers could be forced to pay more, regardless of their home’s proximity to wildfire dangers. Before State Farm’s announcement, the company requested a 28% rate hike on homeowners’ insurance; Allstate has filed for a 39.6% increase.