Two more insurers are set to stop renewing homeowner policies in California despite a recent rate hike approval.
According to recent filings with the state’s Department of Insurance, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. will not be renewing homeowner and personal umbrella policies within the state, totaling about $11.3 million in homeowner premiums and another $400,000 for personal umbrella policies.
In 2022, Tokio had the 18th highest market share in California for property and casualty insurance, or 1.45 percent, and Trans Pacific wasn’t listed. A request for updated figures wasn’t immediately returned by the Insurance Department.
In total, around 12,556 homeowner policies will be impacted and 2,732 personal umbrella policies, according to the filing, with non-renewal notices being sent out as early as July 2024, effective July 2025.
The filings gave no reason for the change. Neither insurer has returned requests for comment.
In March, California’s largest provider of homeowner and casualty property insurance, State Farm, announced it would not renew about 72,000 policies for California homes and apartments, including many in affluent Los Angeles County cities such as . Pacific Palisades, Bel-Air and Brentwood.
The company announced it would stop offering commercial apartment policies altogether, which would affect 42,000 apartment owners.
The insurer raised rates in January by 20 percent per homeowner for renewals.
Because of recent disasters that have drained insurance companies of their reserves, many have withdrawn from the California market.
Some insurers have said the move will help ensure existing policyholders’ claims can be covered by maintaining “adequate claims-paying capacity,” which is also required by law.
Since May 2023, State Farm has ceased accepting new business, personal property, and casualty insurance policies, according to a statement issued at the time.
Others such as Allstate, Farmers Insurance, The Hartford and more have announced similar moves beginning last year. In September 2023, Farmers Direct Property and Casualty Insurance withdrew its certificate of authority to offer insurance in California, impacting 58,000 auto and nearly 20,000 home policies, leaving residents with the state’s last resort insurance, the FAIR Plan.
As more insurers stop or pause taking on policies in California, The FAIR Plan, which provides basic coverage when other insurers aren’t available but charges a high premium for it, can’t keep up with the number of new policies it’s taking on.
The FAIR Plan Association saw a record number of new policies in February, officials for the plan said during a March 13 Assembly Insurance Committee meeting.
The plan now insures about 373,000 properties, adding 15,000 in February alone—the most ever—with the plan doubling in size since September 2019, officials said during the meeting.
Officials for the plan say it has too much exposure and could not cover damages in the event of a natural disaster. If one were to happen, a large assessment on other insurers would be needed—raising rates for everyone—FAIR Plan President Victoria Roach told lawmakers during the meeting.
In a September 2023 statement, California Insurance Commissioner Ricardo Lara announced new rules for the industry, to be implemented by the end of 2024, which require insurers to write at least 85 percent of their policies in high-wildfire-risk and “underserved” communities as part of what the state is calling its California Sustainable Insurance Strategy, which aims to expand insurance options in the state.
He also announced a new regulation on March 14 that would ease a restriction on insurers that prevents them from using forward-thinking models to set rates. In 1988, California passed a measure that required insurers to use data based on the past 20 years to set rates.
