The second-largest homes insurance provider in California, Farmers Insurance, said Wednesday that it will begin writing additional home insurance policies in the state ahead of regulatory changes scheduled for next year.
Farmers stopped creating condo and renters insurance policies in 2023 and limited the number of new homeowners insurance clients it could take on to 7,000 per month. According to the firm, it is now aiming to write 9,500 new homeowner’s insurance policies every month. Additionally, before writing new coverage for other insurance kinds it had paused, it intends to insure more condos and renters beginning on December 14.
“We recognize that the state’s insurance marketplace has indeed improved,” said Behram Dinshaw, president of personal lines for Farmers Insurance, “which is why we have decided to take these steps to increase coverage availability for California consumers.”
The insurers’ declaration on Wednesday was the most recent indication that they are willing to reverse their withdrawal from the California home market in response to requested regulatory improvements. Allstate stated in April that it will look into creating new residential policies, and Farmers revealed plans in May to restore business coverage.
A slew of destructive wildfires over the past ten years have left California’s property insurance industry in ruins, with damages projected to reach over $35.8 billion.Hundreds of thousands of policyholders in fire-prone regions including the Wine Country, the East Bay, and the Santa Cruz Mountains no longer have insurance. In the meantime, several of the biggest insurers, such as State Farm and Allstate, have ceased to offer new home insurance plans in California.
State insurance regulators intend to respond by enacting new rules by the end of this year that will fulfill the main demands of insurers, such as enabling providers to raise rates in reaction to future climate change risk and expediting the approval of rate hikes. Regulators have promised that insurers must provide greater coverage in all fire-risk areas of the state in exchange.
However, consumer groups are dubious of the idea, claiming that it will result in significant rate increases throughout the state and that regulators will not be able to fulfill their pledges to force insurers to write more policies in areas that are prone to fires.
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