Two more home insurers are pulling out of California
Thousands more Californians will lose their home insurance this summer as two more insurers withdraw from the state.
In filings with the California Department of Insurance, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. said they would withdraw from the homeowners and personal umbrella insurance markets in California. Both are subsidiaries of Tokio Marine Holdings Inc., a Japanese company.
The two companies together insured 12,556 homeowners in California with $11.3 million in premiums, according to their filings. Tokio Marine also insured 2,732 personal umbrella policies, for liability, worth $400,000.
Neither disclosed the reasons behind the withdrawal or where their policies are in the state. The companies will begin sending nonrenewal notices to customers starting July 1, according to the filings.
Tokio Marine America and Trans Pacific join a roster of insurers big and small that have limited or stopped doing business in California, often citing the risk of wildfires. Some, such as Allstate and State Farm, have stopped writing new policies in the state even as they continue to renew policies — though last month, State Farm announced it would not renew 30,000 homeowner policies, a small fraction of its total business in California. Farmers Direct Insurance has chosen to leave the state.
In addition to wildfires, insurers have cited a range of reasons for dropping customers, including “density,” which refers to either the physical closeness of homes or an insurer’s exposure to risk in a given area, and the risk of fires after earthquakes — a concern that harkens back to April 18, 1906.
Rates have soared for many California homeowners; others have been forced to turn to the FAIR plan, a state-created wildfire insurer of last resort, though it has sometimes been plagued by delays.
In response to the crisis, California Insurance Commissioner Ricardo Lara has proposed a slate of reforms known as the Sustainable Insurance Strategy, designed to attract insurers back to the state. They include ideas such as changing the process for requesting rate hikes to allowing insurers to use forward-looking risk models when raising their rates. All of the strategy’s reforms are set to take effect at the end of the year.
Tokio Marine did not immediately respond to a request for comment.