Car Insurance Companies Leaving California Market

Major auto insurers are withdrawing from the California market, claiming that our drivers are simply too expensive to insure.

Source: CBS News | Published on January 23, 2023

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Major auto insurers are withdrawing from the California market, claiming that our drivers are simply too expensive to insure.

Californians are driving about the same amount as before the pandemic, but not as well.

Auto accidents are on the rise, and some insurance companies claim to be paying out more than they take in. However, the insurance commissioner claims that the facts do not support their claims.

According to the American Property Casualty Insurance Association, auto insurance losses increased by 25% between 2020 and 2021, while premiums increased by only 4.5%. The number and severity of car accidents are increasing, as are the costs to cover them.

“The cost of renting a car has increased by 33%, and the cost of purchasing a new vehicle has increased by 11%,” said Denni Ritter of the American Property Casualty Insurance Association.

Some insurers in California have not had a rate increase approved by the insurance commissioner in over three years.

“What we’ve seen is that insurers are paying out more in claims than they are collecting in premiums. That is not a viable business model “Ritter stated.

California is a very consumer-friendly state, and any rate increase must be approved by the state. State Farm, AllState, and Farmer’s are requesting a nearly 7% increase in premiums from the California Department of Insurance. Progressive is requesting more than 19%. According to a local agent, insurers are now making it more difficult for him to obtain new auto policies for drivers.

“They may request that you pay in full rather than on a payment plan. All of the carriers that I can think of right now have restrictions. They literally say, “Please do not write.” “Susman Insurance’s Karl Susman stated.

Progressive has stopped advertising in California, and Geico has closed all of its California offices.

“You can no longer get quotes from State Farm by calling them. You must visit an agent’s office “Susman stated

A spokesperson for the Insurance Commisioner says “while insurance companies are focused on increasing rates, the department of insurance is focused on protecting drivers and helping them get the most value from the premiums they pay.” His office points out that the commissioner saved Californians $2.4 billion in reduced premiums during the height of the covid stay at home order- when the industry still raked in a collective of $42 billion in excess premiums.

Because California is a “take all” market, insurers cannot refuse to cover residents, but agents say they are forced to work with smaller, lesser-known carriers if clients require insurance quickly.