Another insurance company has pulled out of California, joining a long list of names that are worried about the potential effects of extreme weather. The state and insurers are now “at a major crossroads,” according to experts.
Insurance Woes in California
California homeowners are facing increasing difficulties obtaining private insurance as yet another major insurer, The Hartford, announces it will no longer offer new policies.
The Hartford’s Decision
In a statement, The Hartford revealed, “We have decided to stop offering new homeowners policies starting Feb. 1, 2024.”
The Statement Revealed
“The homeowners’ insurance environment in California has unique challenges that have required us to reconsider the viability of writing new homeowners’ business in the state,” the statement said.
Impact on Existing Policies
Although existing policyholders will see their coverage renewed, the state is seeing more and more similar cases of insurers pulling back from California.
Previous Insurers’ Steps
This move from The Hartford is nothing new for the state of California, as companies like State Farm and Allstate also ceased writing new policies in California due to wildfire risks in November 2022.
Climate Crisis and Extreme Weather
Increasingly severe and frequent extreme weather events due to the climate crisis, including wildfires, hurricanes, and tornadoes, are contributing to a broader insurance crisis in states like California and Florida.
Crossroads With Extreme Weather
“We are at a major crossroads on insurance after multiple years of wildfires and storms intensified by the threat of climate change,” noted California Insurance Commissioner Ricardo Lara.
Tackling the Weather
“I am taking immediate action to implement lasting changes that will make Californians safer through a stronger, sustainable insurance market,” Lara promised.
Risk for California Homes
“The homeowners’ insurance environment in California has unique challenges that have required us to reconsider the viability of writing new homeowners’ business in the state,” The Hartford’s statement said.
The Hartford’s Statement Continues
The Hartford also acknowledged, “We do not enter into this decision lightly, and we appreciate and support efforts like Commissioner Lara’s Sustainability Insurance Strategy to help bring stability to the market.”
Decision-Making Process
The company explained that the decision was based on analyzing trends and challenges, and “Based on these challenges and our analysis of the trends,” they have decided to pull out.
Support for Regulatory Efforts
The Hartford expressed support for Commissioner Lara’s Sustainability Insurance Strategy, “we appreciate and support efforts like Commissioner Lara’s Sustainability Insurance Strategy to help bring stability to the market.”
Confirmation of Homeowner’s Renewal
“We will be watching those efforts closely. Lastly, we continue to write all our other existing products in California, such as business insurance and personal auto, and will continue to renew existing homeowners’ business consistent with our underwriting guidelines,” The Hartford finalized.
Exodus from Florida
Similar instances of insurers leaving Florida in recent years have left residents scrambling for coverage, leading some to go without, with the state now facing the highest premiums in the country.
Premium Disparities
“President Biden should act in the interest of the American people, follow the bipartisan wishes of Congress and stop favoring foreign industry,” said Sen. Marco Rubio, R-Florida.
Governor Newsom’s Executive Order
Governor Gavin Newsom signed an executive order in September to take “prompt regulatory action” to stabilize the insurance market, expand coverage options, and improve the rate approval process.
Governor Newsom’s Request
The order requested prompt action from the California Department of Insurance (CDI) to address the challenges in the insurance market.
A Crossroads for Insurance
As more insurance companies pull out of California after fears of extreme weather, politicians are looking at what needs to change to make sure their citizens are protected from the financial scares that come with the physical threats.
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The post California Faces an Insurance Crisis As Insurers Pull Out of State Over Climate Concerns first appeared on From Frugal to Free.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
