More insurance companies opt to exit California market
More insurance companies opt to exit California market | Insurance Business America
Insurance News
More insurance companies opt to exit California market
Announcement comes amid planned reforms
Insurance News
By
Mika Pangilinan
California has yet to stem the tide of companies exiting its embattled insurance market as four Kemper Corp. subsidiaries recently revealed plans to not renew home and auto policies starting 2024.
The four companies – Merastar Insurance, Unitrin Auto and Home Insurance, Unitrin Direct Property and Casualty, and Kemper Independence Insurance – all cited a nationwide restructuring decision by their parent company as the reason behind the move.
According to documents filed with the California Department of insurance, the companies are withdrawing from the state as part of Kemper’s decision to exit the preferred personal lines marketplace.
The documents noted that Kemper’s personal insurance companies represent only a small fraction of its overall property and casualty business across the country, and that its business in California is “relatively small.”
A Kemper spokesperson also clarified that the move was “not based on considerations specific to any single state.”
California’s insurance exodus
Over the past year, California has seen several insurance companies limiting their presence in the state. Industry giants State Farm and Allstate were among those who declared their decision to cease accepting insurance applications for all business and personal property, with both citing increased business costs and the heightened risk of natural disasters, particularly wildfires.
California’s property insurance market is currently regulated through a ballot measure that was approved by voters in 1988. Proposition 103 requires insurance companies to seek prior approval before being able to adjust their rates. It also prevents companies from utilizing catastrophe models and including reinsurance costs in their pricing.
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