Major insurer to significantly limit its business in California
Major insurer to significantly limit its business in California | Insurance Business America
Insurance News
Major insurer to significantly limit its business in California
It’s more bad news for homeowners
Insurance News
By
Ryan Smith
Another major insurer is planning to limit its business in California, in a fresh blow for a state that has seen a crisis in its homeowners’ insurance market.
USAA will significantly increase its wildfire safety requirements for all new home policies in the state, according to a report by The San Francisco Standard. The impact of the changes is still unclear.
As of last year, USAA was the seventh-largest home insurance provider in the state, the Standard reported.
Beginning in March of next year, four USAA subsidiaries will only issue new homeowners policies if the home has a wildfire risk score of 1 on a 32-point scale, according to the Standard. The higher the number on the scale, the greater the wildfire risk.
USAA previously had different cutoff scores for different counties, but none of the scores were lower than 12, the Standard reported.
Two of the four businesses – the USAA Casualty Insurance Company and Garrison Property and Casualty Insurance Company – only plan to accept new applications for primary homeowners policies if the customer is replacing an existing policy, the Standard reported.
In a filing with the California insurance regulator, USAA said “expected rate inadequacy” was the cause of the changes.
“Exposure with Wildfire Score of 2 or higher is more unprofitable than exposure with Wildfire Score of 1 due to the wildfire risk,” USAA wrote in the filing.
USAA’s filing is the latest in a string of bad news for the California insurance market. Over the past year, carriers like Allstate and State Farm have withdrawn from writing new homeowners policies entirely, while Farmers has announced it would limit policies in the state.
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