Travelers Insurance, one of California’s largest home and auto insurers, is set to raise its rates by an average of 15 percent, the latest in a series of rate increases and policy limitations that majors say insurers, are caused by wildfire risks, reinsurance costs and inflation. .
Given the green light from the California Department of Insurance this week, Travelers will update its pricing for more than 320,000 homeowners starting June 24. It’s not immediately clear which areas of the state will see higher rates.
Michael Soller, deputy commissioner for communications for the state Department of Insurance, said the lack of information was “frustrating at every level.”
The ministry, he said, is doing its best to ensure that consumers do not pay more than what is asked of them. Traveler premium increases, he said, are completely legal under Proposition 103, the 1988 ballot measure that regulated property and casualty insurance pricing.
The average cost of homeowners insurance in the state is $1,250 per year, or about $104 per month. That’s less than the national average of $1,915, according to Nerdwallet. The average cost for a homeowner in the city of Los Angeles is $1,485 per year, or approximately $124 per month.
Travelers is the latest major insurer to raise rates, limit the number of new policies issued or withdraw from the California market altogether – all actions that are straining the market.
In April, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. informed the insurance department that they would not renew 12,556 homeowners insurance policies with a premium value of $11.3 million. from July 1.
State Farm, Farmers and Allstate have limited their offerings in California by reducing new policies issued or tightening underwriting standards. State Farm, for example, announced in March that it would not renew 72,000 policies. Allstate said, however, that once industry-favored insurance reforms proposed by Insurance Commissioner Ricardo Lara take effect, it would begin writing new homeowners insurance policies in the state, said Soller.
Last year, Geico eliminated all of its in-person offices in the state and offers policies only through the company’s website or app.
To make insurance rates “more predictable and insurance more available” in the state, Soller said the department is continuing its progress in updating its regulations.
This update could allow insurers to use algorithms to predict the future risk properties will face in the event of wildfires. Lara proposes allowing insurers to use catastrophe modeling when pricing policies. Currently, premiums are based on an insurance company’s past losses. It is one of several proposals put forward by Lara as part of a sustainable insurance strategy announced last year.
Even as insurers make significant changes to their coverage offerings, many continue to issue new policies in California. Here is a partial list:
Farmers Insurance Group offers limited homeowners insurance policies in California, with a monthly cap of 7,000 new commercial policies.
Mercury not only offers new policies and renews existing ones, it also welcomes clients from Tokio Marina America and its subsidiary Trans Pacific Insurance Co., two agencies that have withdrawn from the California market.
Chub and its subsidiaries, which include Federal Insurance Co., Vigilant Insurance Co. and Pacific Indemnity Co., offer and renew homeowners insurance policies, but with two limitations. He has stopped selling high-value homes with a higher wildfire risk and is not renewing some high-value homes.
United States of America offers new policies if homes meet its underwriting criteria, which limits the insurer to low-risk properties.
Other insurers continuing to renew or issue new policies in the state include Auto Club of Southern California, Liberty Mutual and American Family.
When a potential or current homeowner has difficulty finding an insurance policy in their area, the last resort is the California FAIR Plan Assn. A program established by the State Funded by insurers doing business in California, its mission is to provide homeowners with an affordable insurance option when the traditional market is lacking.
To find out which insurers offer policies in your area, the California Department of Insurance has a “Home Insurance Finder” tool that will help you locate a provider within 5 to 75 miles of your property.
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