California homeowners are increasingly running out of options to insure their homes with a private company, as yet another insurer announces its decision to stop offering new policies to residents.
The Hartford Financial Services Group Inc.—better known as The Hartford—announced on Wednesday that it will no longer offer new personal property insurance coverage to homeowners in the Golden State starting in February. Homeowners with existing policies will continue to be renewed, the company told the San Francisco Chronicle.
The Hartford followed the steps taken by several other private insurers in the past couple of years, including State Farm and Allstate, which both announced they would have stopped writing new policies in the state in November 2022. The two insurers said they were cutting back their coverage in California due to wildfire risks.
Studies have shown that the climate crisis has increased both the frequency and severity of extreme weather events like wildfires, hurricanes and tornadoes, especially in vulnerable states like California and Florida, which are both experiencing an ongoing insurance crisis.
Smaller insurers, including Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company, and Kemper Independence Insurance Company, announced last year that they would not renew policies in California in 2024.
The result is that the number of options available to California homeowners to insure their properties is shrinking, and at the same time, their homes are more at risk of being damaged or destroyed by an extreme weather event.
The Hartford told Insurance Business that “the unique challenges” of California’s homeowners’ insurance environment have required the company “to reconsider the viability of writing new homeowners’ business in the state.”
A spokesperson for the company said, “Based on these challenges and our analysis of the trends, we have decided to stop offering new homeowners policies starting Feb. 1, 2024.” The Hartford has a homeowners insurance market share of less than 1 percent in the state, according to data from S&P Capital IQ.
Newsweek reached out to The Hartford for comment via email on Thursday morning.
Several major private insurers also left Florida in the past couple of years, leaving many homeowners in the state scrambling to get coverage or deciding to go “bare”—without coverage. Residents of the Sunshine State are currently paying the highest premiums in the entire country, for an average of about $4,218 a year, according to the latest data from Insurance.com. That’s nearly double the national average of $2,777.
The situation is different in many ways in California, where the average cost for homeowners insurance is $1,380 a year, according to Insurance.com, much below the national average.
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The low price of insurance in the Golden State is mainly due to the passing of Proposition 103 some 35 years ago. This measure completely overhauled the nation’s largest insurance market by requiring “prior approval” from the California Department of Insurance (CDI) before implementing property and casualty insurance rates.
Prop 103 doesn’t give California authorities the power to stop private insurers from pausing coverage in the state.
In September, California Governor Gavin Newsom, a Democrat, signed an executive order requesting that the state’s insurance regulator take “prompt regulatory action” to stabilize the deteriorating insurance market. The order urged the CDI to expand coverage options in the state and offer a better rate approval process.
Newsweek contacted Newsom’s office for comment via email on Thursday morning.
“We are at a major crossroads on insurance after multiple years of wildfires and storms intensified by the threat of climate change. I am taking immediate action to implement lasting changes that will make Californians safer through a stronger, sustainable insurance market,” California Insurance Commissioner Ricardo Lara said in a press release.
“The current system is not working for all Californians, and we must change course.”
Are you a California homeowner who is struggling with finding coverage with a private insurer? Contact [email protected]
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.