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California Insurance Coverage: First- State Farm, now Allstate also quits California

An excerpt from a current report in the San Francisco Chronicle-
Allstate has stopped writing new homeowner, condominium and commercial insurance policies in California, the company confirmed to The Chronicle.

The insurer, the fourth largest property and casualty insurance provider in the state in 2021, paused new policies “so we can continue to protect current customers,” spokesperson Brittany Nash wrote in an email to the Chronicle.

The pause began last year but appeared to receive only a passing mention in industry publications. The Chronicle learned of the development this week, after reviewing an Allstate rate increase request to the California Department of Insurance.

It was not immediately clear what prompted Allstate’s pullback on new policies. But State Farm, the largest provider of property and casualty insurance in California, made waves in late May by announcing it would stop issuing new homeowner policies in the state due to inflation, wildfires and rising reinsurance costs.

That Allstate quietly did the same thing last year signals that the insurance woes in the state may be more severe than the public is aware of.

“State Farm is unusual in that it announces such underwriting actions. It is not required by law and most insurers do not,” said Rex Frazier, president of the Personal Insurance Federation of California, in an email to The Chronicle over the weekend.

The only public disclosure required of insurers pulling back eligibility in the state comes when they ask the California Department of Insurance for rate increases, Frazier said Thursday.

At least two other insurers, AIG and Chubb, which cater to high-end homes, have pulled coverage for some of their customers in recent years.

Comments

  • How many people confirm their ability to secure insurance before they purchase a home? Farmers, CSAA, and Liberty Mutual round out the top five issuers, I think.
  • If you aren’t paying cash don’t you have to provide proof of insurance to actually close the transaction. The lender demands it, and to be named as additional insured so the escrow people won’t let the deal close without it.
  • edited June 2023
    Even if you pay cash to purchase your house, how do you get your house for insured for damages due to natural disasters?

    In addition, Florida and the southeastern coast are all vulnerable to hurricanes. The natural disaster issue is more widespread than we think.
    https://grist.org/extreme-weather/wildfires/

  • Homeowners may choose to simply go bare.
    https://www.nbcnews.com/id/wbna17692537

    That has long been the pattern with one natural disaster, earthquakes:
    The top three markets in the country — California, Washington and Missouri — highlight how unprepared the nation is.
    • Despite experiencing 90% of the country’s earthquakes, only 10% of California’s residents have earthquake insurance.
    • Only 11.3% of Washington’s residents were covered in 2017 despite having the second-largest market in the seismic space.
    • Missouri’s New Madrid area is a lesson in what skyrocketing premiums can do to the insurance market. In 2000, 60% of its residents had coverage. As of 2021, that number has declined to 11.4%.
    https://www.fema.gov/emergency-managers/risk-management/earthquake/insurance
  • Taking trips back to St. Louis, and seeing all of the brick buildings, has always been a jolt after so many years in California. Nothing to take me back there anymore.

    Wild fire tends to show up more often in California.

    Both states share flooding problems in different ways.

    Arizona is strangely tranquil, all things considered.
  • Maricopa County (Phoenix) is number 1 with a bullet for heat.
    Rhodium Group researchers estimate that under the RCP 8.5 scenario, between 2040 and 2060 extreme temperatures will become commonplace in the South and Southwest, with some counties in Arizona experiencing temperatures above 95 degrees for half the year.
    ...
    By midcentury, ... some areas we don't usually think of as humid, like southwestern Arizona, will see soaring wet bulb temperatures because of factors like sun angle, wind speed and cloud cover reacting to high temperatures ...
    https://projects.propublica.org/climate-migration/
  • Climate change have changed the desirable places to live. Many places on Canada are experiencing drier and warmer weather. Article from Washington Post ( behind a paywall) indicating we are heading into big trouble.
    https://washingtonpost.com/science/2023/06/02/earth-commission-climate-pollution-limits/#
  • edited June 2023
    We've seen the numbers from Rhodium. And we think about them. But they don't currently impact insurance rates like wild fires, floods, earthquakes, mud slides, or coastal erosion.

    As far as humidity goes, Arizona has been keeping its monsoon season quiet for a very long time. I am often reminded of summer in St. Louis, without the bugs and pollens. But we don't live in SW Arizona, which could be future beach-front property on the Gulf of California.

    At the present time our utilities are exceptionally backward on the potential for distributed solar as a source of power, or even for an albedo effect. But one of the reasons I bought GRID was a bet on more focused thinking in the future. It wouldn't take much for Arizona to export a lot of electrical energy all year round.

    At the present time, my wife would dearly love to go back to California, despite multiple immediate threats like wild fires, flooding, and earthquakes. I think she would be happy in a shoe, or a shoe box. All of the friends. All of the history. And so on.

    At the same time, she worries about the effect of global warming on the value of our home in Tempe. Well then. Let's move to Duluth/Superior, St. Paul, Stillwater, etc. We might know some people due to our college daze back there. But if the Gulf Stream collapses, it could be a lot colder than it is now.

  • Hi @WABAC Some Arizona areas to limit and/or restrict new home construction. Multiple article links.
    This (water) has been a long time discussion among friends who moved to Arizona for work. One couple returned to Michigan last winter permanently, from where they started 30 years ago. We've also discussed the Taiwan Semiconductor factory being built and what will be the water source for such operations going forward. They also grew weary of the traffic flows around Phoenix. So, they gladly trade the summer heat of Arizona for the winter chill of Michigan.
  • Hi @catch22. This discussion started with the insurance impact of changing weather patterns

    Water politics in the West, and Arizona, deserve a thread of their own for anyone considering investing in water, alternative energy, buying property in the West and so on. And I would be happy to engage.

    This thread had been about the particular insurance environment in California, and other regions threatened by the near-term catastrophic effects of changing weather patterns.

    In the meantime . . .

    If the choice in Arizona comes down to water for semiconductors or Middle Eastern royal families growing alfalfa to export to feed cows in their countries . . . . you might end up paying more for ghee, and other dairy products.

    I have never run into anyone that doesn't complain about traffic.
  • Allowing the growth and export of water-intensive crops needs to be given a real hard look. To name a few of the worst offenders, we export tons of water in the form of cotton, alfalfa, and almonds from areas increasingly short on water, to China and the Mideast. When money talks, anything goes, and to hell with the common good.
  • Building codes in many western states are not set up to prevent wildfires today. Siding and roofing materials commonly used are susceptible to fires. Since wood is plentiful in Pacific Northwest region, wood siding is common instead of concrete siding (Hardy Planks). Older houses even have shake wood singles instead of metal roofs, and composition roof, a flammable material is also common used.

    I am afraid wildfires will soon spread further north and east. The coming of El Niño weather pattern will make the west to have another tough year with wildfires.
  • edited June 2023
    Delete; off topic.
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