Unlike a good neighbor, as a redone State Farm tag line might say, State Farm is gone.
The nation’s largest, and most successful, personal lines insurer will no longer write homeowners and business property-casualty insurance in California. By the way, State Farm is not alone in leaving the California homeowners market.
Last year, AIG told thousands of policyholders that their policies will not be renewed when they come up for renewal.
Considering the market State Farm is leaving, and the wildfire risk the company faces, the leaving makes sense and those in the know following insurance are wondering who in California will be next.
To be specific, in a statement, State Farm said it’s leaving because of record numbers of wildfires the last six years, increasing exposure to those wildfire risks and historic inflation in the construction industry. The decision will include the sale of all homeowners and business insurance policies.
“We take seriously our responsibility to manage risk. We recognize the governor’s administration, legislators and the California department of insurance (CDI) for their wildfire loss mitigation efforts,” the statement said. “We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to improve the company’s financial strength.”
That’s about all State Farm had to say about the exit.
Those with current homeowners polices from State Farm are not affected by the decision. They will — however — likely see the company not renew their homeowners insurance when it comes due.
Mark Sektnan is the vice president for state government relations for the American Property Casualty Insurance Association (APCIA).
“The reality is inflation has increased the cost of every aspect involved in a homeowners insurance claim. It is costing more and taking longer to rebuild homes after a covered loss,” Sektnan said. “The California Department of Insurance is working with insurers toward achieving adequate rates and making other market improvements because the admitted market continues to struggle with inadequate rates that don’t cover the increased risks caused by climate change and the growing number of communities in wildfire-prone areas.”
As for the California Department of Insurance, It said, “The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry and global inflation.”
What makes the State Farm decision so important is that it is — by far — the largest writer of homeowners and business insurance policies in the country. Here is a list of the top 10 which shows you the huge difference.
Note that State Farm does twice the business of second-place Allstate.
1. State Farm
Direct written premium in 2022: $24.4 billion
Market share in 2022: 18.35%
Direct written premium in 2022: $12 billion
Market share in 2022: 9.02%
3. Liberty Mutual
Direct written premium in 2022: $9.7 billion
Market share in 2022: 7.31%
Direct written premium in 2022: $8.85 billion
Market share in 2022: 6.65%
Direct written premium in 2022: $8.25 billion
Market share in 2022: 6.22%
Direct written premium in 2022: $6.4 billion
Market share in 2022: 4.88%
7. American Family Insurance
Direct written premium in 2022: $5.79 billion
Market share in 2022: 4.35%
Direct written premium in 2022: $3.7 billion
Market share in 2022: 2.85%
Direct written premium in 2022: $3.4 billion
Market share in 2022: 2.75%
Direct written premium in 2022: $2.4 billion
Market share in 2022: 1.84%
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Source link: PropertyCasualty360.com — https://bit.ly/3OFUL8K