California’s insurance crisis has reached a new level as two more insurers have announced they are ending property insurance coverage in the state.
This is in addition to several other major insurers who have recently paused or restricted new policies in California.
Tokio Marine America Insurance Co. and Trans Pacific Insurance Co., both owned by Japanese firm Tokio Marine Holdings Inc., have filed notices to California’s Department of Insurance saying they will no longer offer homeowners insurance and umbrella policies in the Golden State. This will affect more than 12,500 policyholders, who can expect non-renewal letters starting July 1.
Tokio Marine Holdings has cited skyrocketing costs and a small segment of personal lines business as reasons for their decision. This is becoming a common trend among insurers in California, as they struggle to keep up with rising costs and risks.
Last year, insurance giant AllState paused sales of new home insurance policies in California due to wildfires and increased business costs. State Farm also stopped accepting new home insurance applications, citing “historic” increases in construction costs, inflation, and catastrophic risks.
Now, State Farm has announced that it will cut 72,000 home and apartment policies in California, further exacerbating the insurance crisis. California’s insurance commissioner, Ricardo Lara, has acknowledged that this is a serious problem, calling it a “real crisis.”
The state’s insurance crisis has been largely driven by the devastating wildfires that have plagued California in recent years. These fires have caused billions of dollars in damage, making it difficult for insurers to continue offering affordable policies. In addition to the financial burden of these disasters, insurers are also facing regulatory costs and increasing risks.
The situation has become so dire that seven of the 12 largest insurance groups in California have either paused or restricted new policy sales in the past year. This means that more and more homeowners will struggle to find affordable insurance options for their properties.
California’s insurance crisis has become a major concern for those who believe that excessive regulations and a lack of proper forest management have contributed to the state’s devastating wildfires. They argue that the government should focus on addressing these issues and promoting responsible forest management practices instead of implementing more regulations, which only drive up costs for insurers and homeowners.
If something is not done soon to address California’s insurance crisis, more and more insurers will likely follow in the footsteps of Tokio Marine and State Farm, leaving homeowners without affordable options for insurance.
