Another homeowners’ insurance carrier leaves California

Key Takeaways:

– The Hartford Financial Services Group will no longer issue new homeowners insurance policies in California starting in February 2024.
– This decision also affects The Hartford’s joint homeowners insurance program with AARP.
– The Hartford cited “unique challenges” in California’s homeowners insurance environment as the reason for this change.
– The company will continue to write new policies for other types of existing insurance in California and renew existing home insurance policies that meet its guidelines.
– State Farm and Allstate are among other major insurers that have pulled out of California, citing increased risks from wildfires and rising costs.
– California has the highest number of homes at risk for extreme wildfires, and building in fire hazard zones has increased.
– Smaller carriers, such as Merastar Insurance Co., Unitrin Auto and Home Insurance Co., and Kemper Independence Insurance Co., have also announced they will not renew homeowners’ policies in California in 2024.
– The California FAIR Plan, the state’s insurer of last resort, has seen increased enrollment as other insurers leave the state.
– A nationwide survey found that 90% of respondents were concerned about rising homeowners insurance costs, and 27% were considering moving to another state to avoid these costs.

HousingWire:

Homeowners in California now have even fewer choices in homeowners insurance carriers. The Hartford Financial Services Group, better known as The Hartford, announced Wednesday that it would no longer issue new homeowners insurance policies in California starting in February 2024.

The firm noted that this change would also impact The Hartford’s joint homeowners insurance program with AARP.

In a statement, The Hartford said that the “unique challenges” presented by California’s homeowners insurance environment led it to “reconsider the viability of writing new homeowners’ business in the state.”

“Based on these challenges and our analysis of the trends, we have decided to stop offering new homeowners policies starting Feb. 1, 2024,” the statement read. “We do not enter into this decision lightly, and we appreciate and support efforts like Commissioner [Ricardo] Lara’s Sustainability Insurance Strategy to help bring stability to the market. We will be watching those efforts closely.”

The Hartford noted that it would continue to write new policies for all other types of existing insurance policies in California. In addition, the firm noted that it would continue to renew existing home insurance policies that are consistent with its underwriting guidelines.

The Hartford joins other major insurers, including State Farm and Allstate, in pulling out of California. In statements about their withdrawals from California, State Farm and Allstate both cited increased risks from wildfires, as well as rising reinsurance and rebuilding costs.

According to the Insurance Information Institute, 1.265 million California homes were at risk for extreme wildfires in 2022, about 400,000 more homes than any other state. Data from CoreLogic shows that the percentage of homes built in California’s Very High Fire Hazard Severity Zones (FHSZ) has declined from 5.5% to 3.5% over the past 15 years, but building in Moderate FHSZ areas has nearly doubled since 2008. While  wildfire risk in these zones is lower, it is still present.

In addition to State Farm, Allstate and The Hartford, smaller carriers including Merastar Insurance Co., Unitrin Auto and Home Insurance Co. , Unitrin Direct Property and Casualty Co., and Kemper Independence Insurance Co. have announced that they will not be renewing homeowners’ policies in California in 2024.

With insurers leaving the state, the California FAIR Plan, the state’s insurer of last resort, saw enrollment jump to 272,846 homes in 2022, prior to the departures of State Farm, Allstate and The Hartford.

A nationwide survey of 1,634 homeowners and non-homeowners conducted by Mphasis Digital Risk found that 90% of respondents were concerned about rising homeowners insurance costs. Additionally, 27% were considering moving to a different state to get away from ever-increasing insurance costs.

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Property Chomp’s Take:

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When it comes to homeowners in California, their choices in insurance carriers are becoming increasingly limited. The latest company to announce its withdrawal from the market is The Hartford Financial Services Group, also known as The Hartford. Starting in February 2024, The Hartford will no longer issue new homeowners insurance policies in California.

This decision will also impact The Hartford’s joint homeowners insurance program with AARP. The company cited the “unique challenges” presented by California’s homeowners insurance environment as the reason for reconsidering the viability of writing new policies in the state.

While The Hartford will continue to write new policies for other types of insurance in California, such as auto or life insurance, the decision to withdraw from the homeowners insurance market is significant. The company joins other major insurers like State Farm and Allstate in pulling out of California. These insurers have cited increased risks from wildfires, as well as rising reinsurance and rebuilding costs, as reasons for their withdrawals.

According to the Insurance Information Institute, California has the highest number of homes at risk for extreme wildfires. In 2022, 1.265 million California homes were considered at risk, which is about 400,000 more homes than any other state. While the percentage of homes built in high-risk fire zones has declined over the years, building in moderate-risk areas has increased, indicating that the wildfire risk is still present.

The withdrawal of insurers from the California market has implications for homeowners. Smaller carriers like Merastar Insurance Co., Unitrin Auto and Home Insurance Co., Unitrin Direct Property and Casualty Co., and Kemper Independence Insurance Co. have also announced that they will not be renewing homeowners’ policies in California in 2024. As a result, enrollment in the California FAIR Plan, the state’s insurer of last resort, has increased.

A nationwide survey conducted by Mphasis Digital Risk found that homeowners and non-homeowners alike are concerned about rising homeowners insurance costs. In fact, 90% of respondents expressed concern, and 27% were considering moving to another state to escape the increasing costs.

In conclusion, homeowners in California are facing a narrowing pool of insurance carriers. The recent decision by The Hartford to stop issuing new homeowners insurance policies in the state adds to the list of insurers withdrawing from California. As homeowners grapple with the challenges of obtaining affordable coverage, the impact of these withdrawals on the insurance market and homeowners’ choices remains to be seen.

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