State Farm Stops Writing New Homeowners' Insurance Policies in Calif

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scifilover
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State Farm Stops Writing New Homeowners' Insurance Policies in Calif

Post by scifilover »

State Farm announced on Friday that they would stop writing NEW Homeowners' insurance policies in California. They cited increases in repair costs and inflation.

Existing policies will continue to be renewed.

As of 2021, State Farm had over 8% of the HO Insurance market in California.

They also cited challenges in obtaining catastrophe reinsurance.

State Farm is the second large insurer taking steps to reduce its California exposures. AIG had previously announced that it was non-renewing its existing policies.

In California, those who cannot buy HO insurance in the regulated insurance market can buy a policy from The CA FAIR Plan. However, FAIR Plan policies are actually written (involuntarily) by companies in the normal market and assigned to them based on their market share. So, as companies take steps to reduce exposure more policies are forced into the FAIR Plan.

It seems possible that California could become, like Florida, a place where the weather is nice but it is hard to get insurance for your home.
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StewedCarrot
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by StewedCarrot »

Understandable, the risk is becoming ever larger and our homes harder to reconstruct. Still, a statewide pullout is unfortunate as wildfire risk is so dramatically different based on terrain and construction.

Speaking of Florida, they may provide the template for reducing our wildfire risk:
https://www.sierraclub.org/sierra/flori ... re-problem
(Long story short - FL provides better legal protections for landowners using fire as a land management tool.)
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by pizzy »

StewedCarrot wrote: Sat May 27, 2023 9:28 am a statewide pullout is unfortunate
I don’t consider continuing to renew existing policies a statewide pullout.
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Alan S.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Alan S. »

This can't make their captive agents very happy and will also result in a loss of a certain portion of their Auto business. Inflation affects everything and would normally be addressed with rate increases. That's another problem as the CA Ins Dept resists most rate increase filings, froze auto rate for 3 years, and only recently granted a few rate increases will a cap of 6.9%, far below accumulated inflation over the last 3 years.

As pressure mounts for other companies to pick up the HO slack, they will need more catastrophe reinsurance as well, driving up the price. In a normal situation, they might require supporting business such as the auto policy, but that's not attractive to them in CA either due to the difficulty in receiving approval for rate increases.

All in all, personal lines insurance in CA faces serious challenges and the DOI will be forced to adjust their position relative to rate increases or many more carries will exit the state.
privateer79
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by privateer79 »

pizzy wrote: Sat May 27, 2023 9:38 am
StewedCarrot wrote: Sat May 27, 2023 9:28 am a statewide pullout is unfortunate
I don’t consider continuing to renew existing policies a statewide pullout.
I'm not an expert, but I believe there may be some regulations that prevent insurance providers from just exiting a state as of a certain date and not renewing anyone. (i.e. to prevent a provider from having a few good huricane-free years in Florida, and then rug-pulling the insurance float)

its possible that this is as close as statefarm can get to a pullout.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Weathering »

This was mentioned a few days ago within my neighborhood group. One neighbor was given the option to sign up with State Farm on that day only (policy could not be written the next day). It totally sounded like a high pressure sales tactic but it turned out to be true. The neighbor didn’t go with it and now is stuck with only CA Fair Plan as an option (about double the price of the State Farm quote at >$7,500/yr).

I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.

Many condo association in this So Cal city are having great difficulty getting insurance at all. This is resulting in big assessments to individual condo owners. Fortunately, I don’t have to worry about that but it will be another issue which could help get attention on the situation and a future solution.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by RetiredAL »

So has USAA.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Stinky »

Here’s a link to a WSJ article which cites what is likely really behind the pullout. That is, the inability of insurers to charge adequate premium rates to cover the risks, because of the strong power of the state insurance commissioner to effectively set rates. (Sorry for the paywall)

https://www.wsj.com/articles/insurance- ... er-db0af00

Politicians can try to hold down insurance rates by edict. However, if they hold down rates below “adequate” levels for long enough, even the strongest companies (like State Farm) can’t afford the losses.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by bgf »

Weathering wrote: Sat May 27, 2023 12:01 pm This was mentioned a few days ago within my neighborhood group. One neighbor was given the option to sign up with State Farm on that day only (policy could not be written the next day). It totally sounded like a high pressure sales tactic but it turned out to be true. The neighbor didn’t go with it and now is stuck with only CA Fair Plan as an option (about double the price of the State Farm quote at >$7,500/yr).

I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.

Many condo association in this So Cal city are having great difficulty getting insurance at all. This is resulting in big assessments to individual condo owners. Fortunately, I don’t have to worry about that but it will be another issue which could help get attention on the situation and a future solution.
What is the state supposed to do? Insurance is a pretty low barrier to entry industry, is low margin, and is fundamentally based on objective risk of loss and associated costs. At the end of the day, if the business prospects aren’t there, the businesses won’t underwrite the policies. As far as I’m aware, the state of California can’t regulate businesses that don’t operate in California.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Stinky »

Weathering wrote: Sat May 27, 2023 12:01 pm
I’m hopeful that the state takes action to make home owners insurance affordable in the future.
What action would you propose that the state of California take to make insurance more affordable?
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by afan »

Stinky wrote: Sat May 27, 2023 12:07 pm Here’s a link to a WSJ article which cites what is likely really behind the pullout. That is, the inability of insurers to charge adequate premium rates to cover the risks, because of the strong power of the state insurance commissioner to effectively set rates. (Sorry for the paywall)

https://www.wsj.com/articles/insurance- ... er-db0af00

Politicians can try to hold down insurance rates by edict. However, if they hold down rates below “adequate” levels for long enough, even the strongest companies (like State Farm) can’t afford the losses.
At some point, insurance companies have to make a profit.

There are other states that were so restrictive on insurance companies that many moved out. Some were forced to continue to serve existing customers but could refuse to write more. Their market share continues to decline, which is exactly what the companies want. The state now has a collection of smaller companies that primarily serve that one state. The nationals have largely pulled out
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Weathering »

bgf wrote: Sat May 27, 2023 12:13 pm
Weathering wrote: Sat May 27, 2023 12:01 pm This was mentioned a few days ago within my neighborhood group. One neighbor was given the option to sign up with State Farm on that day only (policy could not be written the next day). It totally sounded like a high pressure sales tactic but it turned out to be true. The neighbor didn’t go with it and now is stuck with only CA Fair Plan as an option (about double the price of the State Farm quote at >$7,500/yr).

I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.

Many condo association in this So Cal city are having great difficulty getting insurance at all. This is resulting in big assessments to individual condo owners. Fortunately, I don’t have to worry about that but it will be another issue which could help get attention on the situation and a future solution.
What is the state supposed to do? Insurance is a pretty low barrier to entry industry, is low margin, and is fundamentally based on objective risk of loss and associated costs. At the end of the day, if the business prospects aren’t there, the businesses won’t underwrite the policies. As far as I’m aware, the state of California can’t regulate businesses that don’t operate in California.
I was thinking the state would require home owners to mitigate fire hazards and require cities to remove all sources of combustion (remove most trees, require gravel embankments on all streets rather than grasses, require annual vegetation removal on all open-space areas, mitigate any fire corridors). This would make California more visually like AZ, but since we are both desert climates it would make sense for CA to be more like AZ.

I know this would be an issue for native plants&animals. I don’t have a proposal on how to handle that other than to ring-fence the native areas with fire prevention zones.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by billaster »

There's over 100 companies selling homeowners insurance in California. Not all companies serve all areas.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by CRC_Volunteer »

If memory serves correctly, after the disastrous 2004-2005 hurricane seasons in FL, the major insurance companies were going to stop writing HO insurance in FL. The state of FL said, if you do not write HO, then you cannot write Auto.

Sometimes the stick works better than the carrot.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by theron »

afan wrote: Sat May 27, 2023 12:38 pm
Stinky wrote: Sat May 27, 2023 12:07 pm Here’s a link to a WSJ article which cites what is likely really behind the pullout. That is, the inability of insurers to charge adequate premium rates to cover the risks, because of the strong power of the state insurance commissioner to effectively set rates. (Sorry for the paywall)

https://www.wsj.com/articles/insurance- ... er-db0af00

Politicians can try to hold down insurance rates by edict. However, if they hold down rates below “adequate” levels for long enough, even the strongest companies (like State Farm) can’t afford the losses.
At some point, insurance companies have to make a profit.

There are other states that were so restrictive on insurance companies that many moved out. Some were forced to continue to serve existing customers but could refuse to write more. Their market share continues to decline, which is exactly what the companies want. The state now has a collection of smaller companies that primarily serve that one state. The nationals have largely pulled out
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Jeepergeo »

I've had homeowners, auto, liability, and life insurance with State Farm for 40 years, with varying levels of satisfaction, but staying for one shop convenience. If State Farm were to refuse to renew my homeowners insurance, I'd pull 100% of my business and take it somewhere else. My agent knows that.

Cities and counties have allowed construction of residential units in very risky areas that are difficult to protect from fires and floods and other hazards. For years, the true costs to protect and insure these properties has been substantially shared by those living in substantially lower risk areas.

Unfortunately, when insurance companies worked to correct this situation, there was an outcry, and insurance regulation was increased and the state developed an assigned risk program whereby the state forced private insurance companies to insure "their share" of these otherwise prohibitively costly to insure properties. A vicious cycle st best.

I can understand why State Farm won't write new policies....however, if they stop renewals it will have consequences that go well beyond their homeowners insurance line no doubt.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by quantAndHold »

CRC_Volunteer wrote: Sat May 27, 2023 12:45 pm If memory serves correctly, after the disastrous 2004-2005 hurricane seasons in FL, the major insurance companies were going to stop writing HO insurance in FL. The state of FL said, if you do not write HO, then you cannot write Auto.

Sometimes the stick works better than the carrot.
Are there any major insurance companies writing HO policies in FL? Any? Most people in Florida are insured by Billy Bob’s insurance company, or something like that.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by celia »

theron wrote: Sat May 27, 2023 12:47 pm
afan wrote: Sat May 27, 2023 12:38 pm At some point, insurance companies have to make a profit.
Thanks for my morning laugh.
Who would ever invest in a company that can’t make a profit?

Or would you like this to turn into another government agency and have all the state residents be taxed to cover the shortfalls?

Or would you like to let the payouts be less than the cost of the losses? (Think of the state’s California Earthquake Authority in it’s earliest years when you were warned that the fund might not be able to cover all claims when needed? Thus the participants might have a surcharge after a (financially) disastrous earthquake?)
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by celia »

If you think about this “no new policies” policy going forward for a few decades, if it became the norm, you would realize that as people move or die, the new owners might be left without any insurance options thus making the purchase of a house less likely. And the insurance companies would shrink as their policies dry up.

Maybe that would mean, we couldn’t move or at least couldn’t sell the house. (???)
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by RetiredAL »

Weathering wrote: Sat May 27, 2023 12:44 pm
I was thinking the state would require home owners to mitigate fire hazards and require cities to remove all sources of combustion (remove most trees, require gravel embankments on all streets rather than grasses, require annual vegetation removal on all open-space areas, mitigate any fire corridors). This would make California more visually like AZ, but since we are both desert climates it would make sense for CA to be more like AZ.

I know this would be an issue for native plants&animals. I don’t have a proposal on how to handle that other than to ring-fence the native areas with fire prevention zones.
California is a desert? I have a mountain home that has numerous 100' tall pine trees on the lot. Just above Big Trees Sate Park. This picture, from within the park, is typical of what the area looks like.

Image
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Weathering »

RetiredAL wrote: Sat May 27, 2023 2:14 pm
Weathering wrote: Sat May 27, 2023 12:44 pm
I was thinking the state would require home owners to mitigate fire hazards and require cities to remove all sources of combustion (remove most trees, require gravel embankments on all streets rather than grasses, require annual vegetation removal on all open-space areas, mitigate any fire corridors). This would make California more visually like AZ, but since we are both desert climates it would make sense for CA to be more like AZ.

I know this would be an issue for native plants&animals. I don’t have a proposal on how to handle that other than to ring-fence the native areas with fire prevention zones.
California is a desert? I have a mountain home that has numerous 100' tall pine trees on the lot. Just above Big Trees Sate Park. This picture, from within the park, is typical of what the area looks like.

Image
Not to be snarky, but that looks beautiful like the AZ White Mountains. Somehow home owners insurance exists in AZ, so hopefully it continues to exist in CA.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Grasshopper »

Arizona resident here I just had a nonrenewal from my HO, saying my home is in a fire prone area. My agent could only find one company that would insure us. The good news is my new policy is $100 a year cheaper with the same level of protection.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Weathering »

RetiredAL wrote: Sat May 27, 2023 12:03 pm So has USAA.
This is painful for me to hear because USAA was always going to be my fallback plan if I’m ever dropped from my current home owner’s insurance.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by quantAndHold »

Weathering wrote: Sat May 27, 2023 12:01 pm I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.
When I bought my place in San Diego in 1997, I intentionally chose a place with low wildfire, earthquake, and flood risk. As a result, my homeowners insurance is still $1600. Are you really suggesting that I should subsidize the poor choices of people who didn’t do that?
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by RetiredAL »

quantAndHold wrote: Sat May 27, 2023 2:55 pm
Weathering wrote: Sat May 27, 2023 12:01 pm I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.
When I bought my place in San Diego in 1997, I intentionally chose a place with low wildfire, earthquake, and flood risk. As a result, my homeowners insurance is still $1600. Are you really suggesting that I should subsidize the poor choices of people who didn’t do that?
Mountain home was my Dad's. The insurance on the mountain place been 2.5x for 3/4 the house, compared to his Stockton home, both with USAA. The mountain home was definitely paying a higher risk premium, which I'm OK with.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Weathering »

quantAndHold wrote: Sat May 27, 2023 2:55 pm
Weathering wrote: Sat May 27, 2023 12:01 pm I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.
When I bought my place in San Diego in 1997, I intentionally chose a place with low wildfire, earthquake, and flood risk. As a result, my homeowners insurance is still $1600. Are you really suggesting that I should subsidize the poor choices of people who didn’t do that?
To be clear, I’m suggesting the state require or encourage fire mitigation, not subsidize anything.
For example, my home owners association has 1700 acres of native coastal scrub. This never gets touched and gets thicker every year. It was a selling point 18 years ago, but now means the entire development is red on insurance maps.

I wish the state would say to insurance companies, “how can we make CA a place where you can offer insurance? What do we need to do?” Then a set of regulations would be drawn up, just like CEQA guidelines for environmental issues, and because of this CA becomes a state with better fire prevention along with a healthy home owners insurance market. But in the case of my HOA, I expect it would mean at least 100’ of native coastal scrub would need to be removed along all the roadways and homes in the neighborhood. It might even require us to pave a road to the center of the vegetation, along with a fire hydrant, for fire department access. This would cause an uproar well beyond my neighborhood and under current law it would result in very large fines. Some balance between people and nature needs to be achieved in a way that both can survive.

I have heard of some insurance companies requiring my neighbors to cut down trees near their homes and replace sections of wooden fences with non-combustible material fencing where they attach to their homes.It seems to happen in a rush and the homeowner pays a high price to get it done within two weeks or else be dropped from insurance. More guidelines like this, known in advance, could make it better for both insurers and homeowners. Rather than have the insurers do this on their own, I’m suggesting the state partner with the insurance companies on creating, allowing, and encouraging or requiring some guidelines.

One more example, I got a quote for fire-safe attic vents a few years ago. They would reduce the chance of fire embers getting through my attic vents and igniting my home. I didn’t move forward with the project because the city permit to replace my four attic vents was $1,200. The attic vents were $2,500 including installation but I could get 60% refunded by my county. The city should have figured out a way to offer discounted permits for fire safety measures (e.g., pictures instead of site visits to lower their costs). The result was no one in my neighborhood had their attic vents replaced with the fire-safe version.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by talzara »

scifilover wrote: Sat May 27, 2023 8:50 am As of 2021, State Farm had over 8% of the HO Insurance market in California.
State Farm has 19% of the homeowners insurance market in California.

It would be bad enough if it were just State Farm, but Allstate (6%) also stopped writing in November 2022. Many companies have also stopped writing in certain ZIP codes but not statewide.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Big Dog »

Weathering wrote: Sat May 27, 2023 12:44 pm
bgf wrote: Sat May 27, 2023 12:13 pm
Weathering wrote: Sat May 27, 2023 12:01 pm This was mentioned a few days ago within my neighborhood group. One neighbor was given the option to sign up with State Farm on that day only (policy could not be written the next day). It totally sounded like a high pressure sales tactic but it turned out to be true. The neighbor didn’t go with it and now is stuck with only CA Fair Plan as an option (about double the price of the State Farm quote at >$7,500/yr).

I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.

Many condo association in this So Cal city are having great difficulty getting insurance at all. This is resulting in big assessments to individual condo owners. Fortunately, I don’t have to worry about that but it will be another issue which could help get attention on the situation and a future solution.
What is the state supposed to do? Insurance is a pretty low barrier to entry industry, is low margin, and is fundamentally based on objective risk of loss and associated costs. At the end of the day, if the business prospects aren’t there, the businesses won’t underwrite the policies. As far as I’m aware, the state of California can’t regulate businesses that don’t operate in California.
I was thinking the state would require home owners to mitigate fire hazards and require cities to remove all sources of combustion (remove most trees, require gravel embankments on all streets rather than grasses, require annual vegetation removal on all open-space areas, mitigate any fire corridors). This would make California more visually like AZ, but since we are both desert climates it would make sense for CA to be more like AZ.

I know this would be an issue for native plants&animals. I don’t have a proposal on how to handle that other than to ring-fence the native areas with fire prevention zones.
Only SoCal. There are plenty of fire zones in rainy NorCal. (Paradise fire comes to mind.)
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by bgf »

Weathering wrote: Sat May 27, 2023 12:44 pm
bgf wrote: Sat May 27, 2023 12:13 pm
Weathering wrote: Sat May 27, 2023 12:01 pm This was mentioned a few days ago within my neighborhood group. One neighbor was given the option to sign up with State Farm on that day only (policy could not be written the next day). It totally sounded like a high pressure sales tactic but it turned out to be true. The neighbor didn’t go with it and now is stuck with only CA Fair Plan as an option (about double the price of the State Farm quote at >$7,500/yr).

I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.

Many condo association in this So Cal city are having great difficulty getting insurance at all. This is resulting in big assessments to individual condo owners. Fortunately, I don’t have to worry about that but it will be another issue which could help get attention on the situation and a future solution.
What is the state supposed to do? Insurance is a pretty low barrier to entry industry, is low margin, and is fundamentally based on objective risk of loss and associated costs. At the end of the day, if the business prospects aren’t there, the businesses won’t underwrite the policies. As far as I’m aware, the state of California can’t regulate businesses that don’t operate in California.
I was thinking the state would require home owners to mitigate fire hazards and require cities to remove all sources of combustion (remove most trees, require gravel embankments on all streets rather than grasses, require annual vegetation removal on all open-space areas, mitigate any fire corridors). This would make California more visually like AZ, but since we are both desert climates it would make sense for CA to be more like AZ.

I know this would be an issue for native plants&animals. I don’t have a proposal on how to handle that other than to ring-fence the native areas with fire prevention zones.
Aaah, I misunderstood you. Those are interesting points.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Stinky »

Weathering wrote: Sat May 27, 2023 3:28 pm I wish the state would say to insurance companies, “how can we make CA a place where you can offer insurance? What do we need to do?”
How about “Allow home insurers to set prices at a level that allows them to make a reasonable profit on their California business”.

Price controls on goods or services ultimately lead to shortages of supply. Home insurance is not an exception to that rule.

State Farm doesn’t hate California. But State Farm can’t continue to write business in a state where it (apparently) can’t make money.
Last edited by Stinky on Sat May 27, 2023 4:27 pm, edited 1 time in total.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Artsdoctor »

quantAndHold wrote: Sat May 27, 2023 2:55 pm
Weathering wrote: Sat May 27, 2023 12:01 pm I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.
When I bought my place in San Diego in 1997, I intentionally chose a place with low wildfire, earthquake, and flood risk. As a result, my homeowners insurance is still $1600. Are you really suggesting that I should subsidize the poor choices of people who didn’t do that?
The problem that many are dealing with is that the lines of hazard which existed in 1997 have been moved. Fire zones have changed and earthquake fault lines have been addended; even flood zones now acknowledged where there was never a mention of them previously. The climate is different and the price of rebuilding has increased. Like you, I factored in those hazard lines when I bought our house 25 years ago but the state has redrawn those lines since.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Ricola »

Weathering wrote: Sat May 27, 2023 2:52 pm
RetiredAL wrote: Sat May 27, 2023 12:03 pm So has USAA.
This is painful for me to hear because USAA was always going to be my fallback plan if I’m ever dropped from my current homeowner’s insurance.
Guess it was coming, a year ago or so for no reason and none provided, USAA raised my annual rate by 44%. Easy way to eliminate policyholders in an area.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by talzara »

CRC_Volunteer wrote: Sat May 27, 2023 12:45 pm If memory serves correctly, after the disastrous 2004-2005 hurricane seasons in FL, the major insurance companies were going to stop writing HO insurance in FL. The state of FL said, if you do not write HO, then you cannot write Auto.

Sometimes the stick works better than the carrot.
GEICO is in Florida, and it doesn't write homeowners insurance at all.
quantAndHold wrote: Sat May 27, 2023 1:46 pm Are there any major insurance companies writing HO policies in FL? Any? Most people in Florida are insured by Billy Bob’s insurance company, or something like that.
Progressive and USAA are the only two large national insurers that write homeowners insurance in Florida. There are also some smaller national insurers like Amica, but they are very picky about what houses they will accept.

Several other large national insurers operate single-state non-pooled subsidiaries in Florida. Because they are not pooled, these subsidiaries do not have access to their parent companies' national reserves. For example, State Farm has an A++ rating from AM Best, but State Farm Florida only has an A- rating. If State Farm Florida goes bankrupt, State Farm can cut its losses and walk away from the state.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by talzara »

Weathering wrote: Sat May 27, 2023 12:01 pm This was mentioned a few days ago within my neighborhood group. One neighbor was given the option to sign up with State Farm on that day only (policy could not be written the next day). It totally sounded like a high pressure sales tactic but it turned out to be true. The neighbor didn’t go with it and now is stuck with only CA Fair Plan as an option (about double the price of the State Farm quote at >$7,500/yr).
Exploding offers for homeowners insurance are unusual. That should've been a sign that something was happening.

Sometimes you have to make decisions about insurance very quickly. For example, when a hurricane is approaching, all of the insurance companies will place a moratorium on new policies. If an agent is telling you that the quote is only valid for the next two hours, then you should buy within the next two hours. You can buy a policy and cancel it later if you find a better deal, but you can't buy at any price after the moratorium is in place
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by quantAndHold »

Artsdoctor wrote: Sat May 27, 2023 3:56 pm
quantAndHold wrote: Sat May 27, 2023 2:55 pm
Weathering wrote: Sat May 27, 2023 12:01 pm I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.
When I bought my place in San Diego in 1997, I intentionally chose a place with low wildfire, earthquake, and flood risk. As a result, my homeowners insurance is still $1600. Are you really suggesting that I should subsidize the poor choices of people who didn’t do that?
The problem that many are dealing with is that the lines of hazard which existed in 1997 have been moved. Fire zones have changed and earthquake fault lines have been addended; even flood zones now acknowledged where there was never a mention of them previously. The climate is different and the price of rebuilding has increased. Like you, I factored in those hazard lines when I bought our house 25 years ago but the state has redrawn those lines since.
Fair enough. I wasn’t really thinking of bright read lines drawn by some bureaucrat or underwriter. I was thinking of common sense stuff like not buying a house on the rim of an undeveloped canyon or in a river valley. People buy houses on a bluff facing the ocean, and are then surprised when the bluff collapses into the ocean a decade or two later, for example. There’s nothing surprising about that, coastal bluff erosion has been a thing since the beginning of time.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Rex66 »

It’s pretty difficult to know if an insurance company is charging too much or even too little. This becomes even more difficult to determine when there are fewer companies in a state. The state insurance commissioner doesn’t have better data so there is likely a lot of political type reasoning in their decisions.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Weathering »

quantAndHold wrote: Sat May 27, 2023 4:39 pm
Artsdoctor wrote: Sat May 27, 2023 3:56 pm
quantAndHold wrote: Sat May 27, 2023 2:55 pm
Weathering wrote: Sat May 27, 2023 12:01 pm I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.
When I bought my place in San Diego in 1997, I intentionally chose a place with low wildfire, earthquake, and flood risk. As a result, my homeowners insurance is still $1600. Are you really suggesting that I should subsidize the poor choices of people who didn’t do that?
The problem that many are dealing with is that the lines of hazard which existed in 1997 have been moved. Fire zones have changed and earthquake fault lines have been addended; even flood zones now acknowledged where there was never a mention of them previously. The climate is different and the price of rebuilding has increased. Like you, I factored in those hazard lines when I bought our house 25 years ago but the state has redrawn those lines since.
Fair enough. I wasn’t really thinking of bright read lines drawn by some bureaucrat or underwriter. I was thinking of common sense stuff like not buying a house on the rim of an undeveloped canyon or in a river valley. People buy houses on a bluff facing the ocean, and are then surprised when the bluff collapses into the ocean a decade or two later, for example. There’s nothing surprising about that, coastal bluff erosion has been a thing since the beginning of time.
I did a little digging. Here is a map produced by the city of San Diego showing high fire areas.
https://www.sandiego.gov/fire/services/ ... erityzones
Looks like >90% of the city is in a high fire area. I suspect the insurance companies use these maps (as well as their own maps) when determining fire risk. So, even homes that are themselves completely isolated from immediate fire risk are still considered to be high fire risk by insurance because of the greater surrounding area.
This map is created to comply with state law. Since state law requires these areas to be identified, the next step would be state (or city) recommendations to help get areas out of high fire risk.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by quantAndHold »

Weathering wrote: Sat May 27, 2023 5:17 pm
quantAndHold wrote: Sat May 27, 2023 4:39 pm
Artsdoctor wrote: Sat May 27, 2023 3:56 pm
quantAndHold wrote: Sat May 27, 2023 2:55 pm
Weathering wrote: Sat May 27, 2023 12:01 pm I’m hopeful that the state takes action to make home owners insurance affordable in the future. At least this wasn’t specific to a city because then the state wouldn’t get involved. Seems like there needs to be more state-wide issues with home owners insurance before something is done to make it better.
When I bought my place in San Diego in 1997, I intentionally chose a place with low wildfire, earthquake, and flood risk. As a result, my homeowners insurance is still $1600. Are you really suggesting that I should subsidize the poor choices of people who didn’t do that?
The problem that many are dealing with is that the lines of hazard which existed in 1997 have been moved. Fire zones have changed and earthquake fault lines have been addended; even flood zones now acknowledged where there was never a mention of them previously. The climate is different and the price of rebuilding has increased. Like you, I factored in those hazard lines when I bought our house 25 years ago but the state has redrawn those lines since.
Fair enough. I wasn’t really thinking of bright read lines drawn by some bureaucrat or underwriter. I was thinking of common sense stuff like not buying a house on the rim of an undeveloped canyon or in a river valley. People buy houses on a bluff facing the ocean, and are then surprised when the bluff collapses into the ocean a decade or two later, for example. There’s nothing surprising about that, coastal bluff erosion has been a thing since the beginning of time.
I did a little digging. Here is a map produced by the city of San Diego showing high fire areas.
https://www.sandiego.gov/fire/services/ ... erityzones
Looks like >90% of the city is in a high fire area. I suspect the insurance companies use these maps (as well as their own maps) when determining fire risk. So, even homes that are themselves completely isolated from immediate fire risk are still considered to be high fire risk by insurance because of the greater surrounding area.
This map is created to comply with state law. Since state law requires these areas to be identified, the next step would be state (or city) recommendations to help get areas out of high fire risk.
I realize you don’t know San Diego very well, but most of the red areas are either parkland, open space canyons, or military bases. The white areas are where most of the population is.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Big Dog »

Rex66 wrote: Sat May 27, 2023 4:41 pm It’s pretty difficult to know if an insurance company is charging too much or even too little. This becomes even more difficult to determine when there are fewer companies in a state. The state insurance commissioner doesn’t have better data so there is likely a lot of political type reasoning in their decisions.
That is correct. Prop 103 has specific requirements for using historical data of past xx years for rate-making. So, the State Ins Commissioner has all of that info. I've read that the two big issues today are: new fire risk, and the fact that replacement construction costs have skyrocketed since covid. Per 103, the historical average won't come close to addressing the increased fire risks, or the new construction costs. The Insurance Commissioner could approve much higher rates, by waiving the use of historical averages, but that is a non-starter.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Stinky »

Big Dog wrote: Sat May 27, 2023 7:06 pm The Insurance Commissioner could approve much higher rates, by waiving the use of historical averages, but that is a non-starter.
Why is approving higher rates a “non starter”?

Is it for non economic (such as, political) reasons? Or is something else going on?
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Rex66 »

Well if the risk doesn’t turn out to be higher then it gives the appearance the insurance commissioner ignored the actual data, pandered to the insurance industry and didn’t protect the people of the state. Nobody really knows if the risk is going to be higher.

With most of these policies, isn’t the dollar amount for total loss fixed such that increased construction costs aren’t the insurance company’s problem?
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Big Dog »

Stinky wrote: Sat May 27, 2023 7:58 pm
Big Dog wrote: Sat May 27, 2023 7:06 pm The Insurance Commissioner could approve much higher rates, by waiving the use of historical averages, but that is a non-starter.
Why is approving higher rates a “non starter”?

Is it for non economic (such as, political) reasons? Or is something else going on?
It's that 'p' word, which I purposely left off to avoid violating the ToS.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Big Dog »

Rex66 wrote: Sat May 27, 2023 8:04 pm Well if the risk doesn’t turn out to be higher then it gives the appearance the insurance commissioner ignored the actual data, pandered to the insurance industry and didn’t protect the people of the state. Nobody really knows if the risk is going to be higher.

With most of these policies, isn’t the dollar amount for total loss fixed such that increased construction costs aren’t the insurance company’s problem?
That's why the actuaries make the big bucks and have a great quality of life.

The insurance commissioner may or may not be pandering to the industry, but State Farm doesn't think so, and is voting with their feet so to speak.

"Michael Soller, spokesperson for California’s Department of Insurance, said Friday evening via email that the policy change by State Farm was among factors “beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation.”"

While it may be true that those items are beyond their control, they are not beyond pricing into today's rates. They know what the global inflation rate is, they know that the the reinsurance market is costing today, and they can also model an increase for climate change. The Insurance Commissioner chooses not to.

btw: replacement cost is replacement cost. Sure, the house may have a max for burning down to the foundation, but what happens if only the roof and one exterial wall burns? What may have cost $50k to repair in 2019, is now $100k. And due to supply chain issues, temporary housing could be months.

https://www.mercurynews.com/2023/05/26/ ... alifornia/
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by bombcar »

quantAndHold wrote: Sat May 27, 2023 6:44 pm I realize you don’t know San Diego very well, but most of the red areas are either parkland, open space canyons, or military bases. The white areas are where most of the population is.
That's exactly the problem they faced the last time the big fires were down that area, the fires raced up those canyons and jumped freeways to get to other canyons, and threatened (or destroyed) houses above the canyons.

Insurance companies just can't handle mass casualty claims where an event affects some large percentage of their rate-payers. Building codes will have to update to be "more fire-proof" in designated areas (think slate roofs, metal fences, minimum setbacks, etc).

(As an aside looks like the houses I saw that had burned in the Cedar fire are finally rebuilt)
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by tj »

State farm quoted me Renters a few weeks ago, USAA had a better price so I went with them.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by vested1 »

Having lived in one of the most beautiful locations in the world on the central coast of California for 66 years and never having filed a homeowner's insurance claim, I am fully qualified to offer my opinion based on my purely anecdotal experience. I paid about $200 a year for earthquake insurance that I never filed a claim for. I never paid for flood insurance, wind damage insurance, or wildfire insurance (if that even exists). For some odd reason my home was never threatened by a hurricane, a tornado, or a wildfire.

In fact, as a California resident my average HO rates were $100 less than the national average. If I lived in Florida they would be $300 above the national average. Now that I live in SC I pay quite a bit more for HO insurance than I did in California. I suppose that for insurance companies, playing the odds of paying out a claim is the nature of their business.

Somehow, all these insurance companies still manage to make a profit. Weird.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Rex66 »

Big Dog wrote: Sat May 27, 2023 9:25 pm
Rex66 wrote: Sat May 27, 2023 8:04 pm Well if the risk doesn’t turn out to be higher then it gives the appearance the insurance commissioner ignored the actual data, pandered to the insurance industry and didn’t protect the people of the state. Nobody really knows if the risk is going to be higher.

With most of these policies, isn’t the dollar amount for total loss fixed such that increased construction costs aren’t the insurance company’s problem?
That's why the actuaries make the big bucks and have a great quality of life.

The insurance commissioner may or may not be pandering to the industry, but State Farm doesn't think so, and is voting with their feet so to speak.

"Michael Soller, spokesperson for California’s Department of Insurance, said Friday evening via email that the policy change by State Farm was among factors “beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation.”"

While it may be true that those items are beyond their control, they are not beyond pricing into today's rates. They know what the global inflation rate is, they know that the the reinsurance market is costing today, and they can also model an increase for climate change. The Insurance Commissioner chooses not to.

btw: replacement cost is replacement cost. Sure, the house may have a max for burning down to the foundation, but what happens if only the roof and one exterial wall burns? What may have cost $50k to repair in 2019, is now $100k. And due to supply chain issues, temporary housing could be months.

https://www.mercurynews.com/2023/05/26/ ... alifornia/
Actuaries can’t do much when the data is really unknown

That’s why ltci struggled.

Additionally the execs make the final decision. So you have companies bail out and others double down like in ltci
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by Big Dog »

Rex66 wrote: Sun May 28, 2023 9:39 am
Big Dog wrote: Sat May 27, 2023 9:25 pm
Rex66 wrote: Sat May 27, 2023 8:04 pm Well if the risk doesn’t turn out to be higher then it gives the appearance the insurance commissioner ignored the actual data, pandered to the insurance industry and didn’t protect the people of the state. Nobody really knows if the risk is going to be higher.

With most of these policies, isn’t the dollar amount for total loss fixed such that increased construction costs aren’t the insurance company’s problem?
That's why the actuaries make the big bucks and have a great quality of life.

The insurance commissioner may or may not be pandering to the industry, but State Farm doesn't think so, and is voting with their feet so to speak.

"Michael Soller, spokesperson for California’s Department of Insurance, said Friday evening via email that the policy change by State Farm was among factors “beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation.”"

While it may be true that those items are beyond their control, they are not beyond pricing into today's rates. They know what the global inflation rate is, they know that the the reinsurance market is costing today, and they can also model an increase for climate change. The Insurance Commissioner chooses not to.

btw: replacement cost is replacement cost. Sure, the house may have a max for burning down to the foundation, but what happens if only the roof and one exterial wall burns? What may have cost $50k to repair in 2019, is now $100k. And due to supply chain issues, temporary housing could be months.

https://www.mercurynews.com/2023/05/26/ ... alifornia/

Actuaries can’t do much when the data is really unknown

That’s why ltci struggled.

Additionally the execs make the final decision. So you have companies bail out and others double down like in ltci
Perhaps, but estimating/modeling is what they do. And State Farm was able to model it to make a proposal to the State. Moreover, the answer it not Zero, which Ca seems to think it is.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by CRC_Volunteer »

vested1 wrote: Sun May 28, 2023 6:38 am Now that I live in SC I pay quite a bit more for HO insurance than I did in California.
The major price differential in SC is based upon if you live east of I-95 or the Lake Marion area. Those areas pay a higher premium.
Last edited by CRC_Volunteer on Sun May 28, 2023 12:11 pm, edited 1 time in total.
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Re: State Farm Stops Writing New Homeowners' Iinsuarnce Policies in Calif

Post by invest4 »

One of the factors driving action including hefty increases are the price hikes demanded from reinsurers (a vital part of the insurance industry which many people may not be aware of).

https://www.insurancebusinessmag.com/u ... 31735.aspx

It may take awhile yet, but this will inevitably sort itself out as people will either pay the price to live in areas ripe for losses or change their situation.

Hurricane Ian was the tipping point…but increased losses are practically everywhere and prices are going up accordingly.
Last edited by invest4 on Sun May 28, 2023 11:44 am, edited 1 time in total.
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