The state’s coverage crisis appears to be getting worse as two more insurers have stepped away.
Two more home insurance companies have announced that they have ceased selling home insurance to new applicants in California. According to the insurers, the reason for its decision is that wildfire risk and construction costs have risen too high.
The insurers are small but are part of a growing trend
Trans Pacific Insurance Co. and Tokio Marine America Insurance Co. have both announced that they will not accept new applicants for home insurance in California. Both companies are owned by the same firm, Tokio Marine Holdings Inc. of Japan. They recently filed notices to the state Department of Insurance, describing their intention to stop selling coverage in California.
Though this is not as impactful as it was when insurers such as Allstate and State Farm announced that they would be making a similar move, this still means that an additional 12,500 policyholders will be receiving non-renewal letters and will need to start looking for coverage elsewhere.
They will be joining thousands of others who are struggling to find the coverage they need for their California properties.
The home insurance non-renewal letters will start being issued as of July 1
The insurer explained that the skyrocketing cost of doing business in the state has meant that their operations are no longer sustainable.
“Given the small segment of personal lines business we write and escalating costs, we cannot sustainably support personal lines coverages and do not plan to return,” said a statement from Tokio Marine Holdings emailed to Bloomberg. “We remain committed to commercial lines in California – and across the country – and supporting our agents and customers with exceptional service through this transition.”
Growing struggles in the Californian market
Home insurance companies have been increasingly announcing that they are no longer taking new customers in California, that they will not be renewing coverage for those they’re already covering, or that they will be exiting that state’s market altogether. The situation – as is the case in Florida and Louisiana – is increasingly being referred to as a crisis. Many property owners are struggling or are completely unable to find affordable coverage for their properties.
