Four Kemper Corp. subsidiaries have notified California regulators they plan to exit 67,900 personal private-passenger automobile or homeowners insurance policies.
Nonrenewals start on March 1, according to a California Department of Insurance spokesperson.
The four subsidiaries exiting the business in California are Kemper Independence Insurance Co., Merastar Insurance Co., Unitrin Auto and Home Insurance Co. and Unitrin Direct Property and Casualty Co.
The exit impacts 24,500 existing private-passenger auto and 43,400 homeowners policies, Kemper said in regulatory filings.
The preferred home and auto exit nationwide is the latest of a string of operational and underwriting changes underway at Kemper while industry norms have skewed, including consumer behavior.
“This decision affects a small portion of Kemper’s overall property and casualty insurance business and less than 0.4% of California’s homeowners market,” department spokesman Michael Soller said, noting the carrier plans to focus on its 1 million “and growing nonstandard auto insurance policyholders in California.”
A Kemper spokesperson said the company “made the decision to exit the preferred home and auto business nationwide because it was not a strategic fit within our long-term portfolio. The decision was not based on considerations specific to any single state, including California. The decision allows us to redeploy significant capital to our core specialty auto and life businesses, which continue to serve California residents and small businesses.”
Soller said Californians have “many choices for auto insurance in the nation’s largest auto insurance marketplace, and the Department of Insurance is working to increase homeowners insurance options through our Sustainable Insurance Strategy” announced on Sept. 21.
Six California personal lines insurers, including three top-five homeowners writers, announced plans during the third quarter to limit or exit coverage, a situation fueled by out-of-step regulatory characteristics that dogged underwriters even in the best of times, according to industry watchers.
Insurance trade groups support regulatory reforms for California’s beleaguered property insurance market, including modernizing rules for setting rates and an agreement to provide coverage in wildfire-prone areas.
California Insurance Commissioner Ricardo Lara said planned changes amount to the “largest insurance reform since state voters’ passage of Proposition 103 nearly 35 years ago.” He said the state insurance industry is at a major crossroads after multiple years of wildfires and storms intensified by the threat of climate change, he said, and needs lasting changes to support a stronger, sustainable market.
The five largest homeowners multiperil writers in 2022, based on direct premiums written, were: State Farm Group, with a 20.58% market share; Farmers Insurance Group, 14.46%; CSAA Insurance Group, 6.66%; Liberty Mutual Insurance Cos., 6.43%; and Allstate Insurance Group, 6.36%; according to BestLink.
The top five writers of all private passenger auto insurance in California in 2022, based on direct premiums written, were: State Farm Group, with a 12.39% market share; Berkshire Hathaway Insurance Group, 11.79%; Allstate Insurance Group, 10.73%; Farmers Insurance Group, 10.22%; and Auto Club Enterprises Insurance Group, 9.27%, according to BestLink.