Major auto insurers are pulling back in the California market because they say our drivers are too expensive to insure. Home and auto insurance coverage is increasingly difficult to obtain in California and other disaster-prone regions. In January, the mainstream media reported that some of the country's largest insurance companies were pulling out of the California market. According to a CBS News article, Progressive had stopped advertising in the state and GEICO had closed its offices in California.
The article quoted an insurance broker as saying that State Farm only offered in-person quotes and not over the phone. The most recent measure is from smaller insurers. Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company, and Kemper Independence Insurance Company plan not to renew their policies. A spokesperson for the California Department of Insurance (CDI) offered reporters a different perspective: “While insurance companies focus on raising rates, the insurance department focuses on protecting drivers and helping them make the most of the premiums they pay.
Unfortunately, due to an outdated regulatory system in California, insurers have been unable to respond quickly to urgent situations such as inflation. The subsidiaries Merastar Insurance, Unitrin Auto and Home Insurance, Unitrin Direct Property and Casualty, and Kemper Independence Insurance will stop renewing preferential home and auto insurance policies in California, a state that has experienced several wildfires, floods and other extreme weather events in recent years. The dwindling number of insurance options and the growing number of disasters are hurting Floridians. Industry heavyweights, such as Geico, Progressive and Farmers, have begun to leave the California and Florida auto insurance markets, citing rising coverage costs and other changing market factors such as reasons for doing so.
Some state insurers have not received permission to increase rates in more than three years, despite the above-mentioned increase in financial risk. However, the announcement prompted Florida's insurance commissioner, Michael Yaworsky, to write an official letter to Farmers, stressing the importance of the company's exit. And if supply chain problems, such as the shortage of semiconductors, start to improve, the country could also see car prices start to fall again. This means that insurers can't get the rates they need to deal with inflation and the increasing severity of accidents.
While tension between insurance companies and state regulators in California and Florida continues to rise, drivers in states have begun to see their options diminish and their costs rise. In addition, the survey mentioned above showed that 32% of Florida homebuilders say that buyers' concern about insurance is slowing sales, at least a little. However, the fact that more insurers withdraw from California, or at least reduce their presence in the state, could spell problems for the housing market. Some of that legislation has been aimed at curbing a wave of lawsuits against insurers in what the insurance industry considers abuses.
of the legal system. One of the main drivers of rising claim costs is that car accidents have become more frequent and serious in recent years. According to the article, insurance regulators in California and Florida have expressed concern that the withdrawal of insurance providers in their states could be the beginning of a trend that spreads to other parts of the country.
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