A study commissioned by state lawmakers found that 76% of carriers decreased their exposures in Colorado in 2022, leaving the five largest insurance companies to dominate the market.įlorida has struggled to keep the insurance market healthy since 1992, when Hurricane Andrew flattened Homestead, wiped out some insurance carriers and left many remaining companies fearful to write or renew policies in Florida. In Colorado, which has been hit by devastating wildfires, insurance premiums have been rising significantly, and some smaller insurance companies have been pulling back from covering properties. “More homes in harm’s way - combined with rising costs of repairing or replacing houses either damaged or lost to fire - leads to increased insured losses.” “The number of acres burned in California has grown steadily in recent years, as more people are moving into fire-prone areas of the state,” the institute said in a statement on the company departures from California. “What’s happening is a lot of people in my district and frankly other districts are … going naked - they have no insurance.”Īccording to data compiled by the industry-supported Insurance Information Institute, California has more than 1.2 million homes at risk for extreme wildfire, far more than any other state. Bill Dodd, a Democrat from Napa, whose Northern California district has been charred by wildfires. “We just don’t have a stable insurance market,” said state Sen. Enrollments have jumped in recent years to 272,846 homes in 2022. The state pool - the California Fair Access to Insurance Requirements Plan - provides basic fire insurance coverage for properties in high-risk areas when traditional insurance companies will not. A state-run pool that serves as the insurer of last resort for many could face pressure as enrollments surge. Some California homeowners already are going without coverage, and a shortage of new policies could make it more difficult to buy a home. In recent years, California has experienced the largest and most destructive fires in state history. Scientists say climate change has made the West warmer and drier over the last three decades and will continue to make weather more extreme and wildfires more frequent and destructive. Premiums are rising in Colorado amid wildfire threats, and an Oregon effort to map wildfire risk was rejected last year because of fears it would cause premiums to skyrocket. Florida and Louisiana have struggled to keep healthy insurance markets following extensive damage from hurricanes. “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes and higher reinsurance premiums,” Allstate said in a statement.Ĭalifornia’s unsettled market aligns with trends across the country in which companies are boosting rates, limiting coverage or pulling out completely from regions susceptible to wildfires and other natural disasters in the era of climate change. “It’s necessary to take these actions now to improve the company’s financial strength.”Īllstate, another insurance powerhouse, announced in November it would pause new homeowners, condo and commercial insurance policies in California to protect current customers. “We take seriously our responsibility to manage risk,” State Farm said. State Farm announced last week it would stop accepting applications for all business and personal lines of property and casualty insurance, citing inflation, a challenging reinsurance market and “rapidly growing catastrophe exposure.” The decision did not impact personal auto insurance. LOS ANGELES (AP) - Two insurance industry giants have pulled back from California’s home insurance marketplace, saying that increasing wildfire risk and soaring construction costs have prompted them to stop writing new policies in the nation’s most populous state.
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