Our primary insurance market in California is broken, and it’s taking a big toll on people statewide, but especially in our rural area in Mono and Inyo Counties. We at Insurance Scouts do all we can to get people the best home insurance for them, but the reality is insurance companies are leaving California at a rapid rate these days.
State Farm is the latest to stop writing in California entirely, joining the list of carriers who used to issue policies here: Allstate, Travelers, Safeco, Nationwide, Progressive, Chubb, Mapfre, Hartford, Liberty Mutual, Farmers, Guard, Stillwater, Mercury, Great American, MetLife, Kemper, CSE, CIG, and Oregon Mutual.
Here are some recent articles about the situation:
Here’s a brief overview of what’s going on in California... Insurance payouts are more expensive than ever due to many factors. Insurance companies can’t be profitable in California partly because of California’s regulations, which restrict insurers’ ability to properly price the risk of loss and charge the premiums they need to charge. With more and more companies leaving, California’s rural areas (and others) are left with no option except the “last resort” partial insurance policy from the California FAIR Plan.
If you’re a homeowner in Inyo or Mono County, you’re probably aware of the FAIR Plan and its shortcomings, and you may have had issues getting your home insured. Sadly the situation is only getting worse.
What I’m encouraging my clients, colleagues, and community to do is send a letter to the Ombudsman of the California Department of Insurance. The Ombudsman’s primary function is to ensure this department provides the highest level of customer service to consumers, insurers, agents, brokers, and public officials. This position is also responsible for making sure complaints about the insurance department receive full and impartial review.
I created a letter that you can download as a Google Doc (copy & paste the text or click File - Make a Copy - or copy and paste the text of the letter below) so you can edit/personalize the letter and submit it by mail or email. You are welcome to draft your own letter or email if you prefer. The most important thing is that we make our voices heard, and hopefully Insurance Commissioner Ricardo Lara will take action ASAP.
How to contact the Ombudsman:
By mail:
California Department of Insurance
Office of the Ombudsman
300 Capitol Mall, Suite 1600
Sacramento, CA 95814
By email: ombudsman@insurance.ca.gov
By phone: (916) 492-3545.
Please reach out if you have any questions.
Letter text to copy:
Dear Ombudsman,
I’m writing as a [HOMEOWNER, etc.] who lives in [TOWN AND/OR COUNTY]. I’m extremely concerned about the current state of home insurance in California.
[SHARE MORE ABOUT YOUR CONCERNS – ex: My insurance has been non-renewed and I have no options besides the FAIR Plan, which isn’t affordable for my family.]
Our primary insurance market is broken. Insurance companies are unable to get approval for necessary rate increases, which has made them restrict writing policies and actively cancel existing policies. This has made it even harder to find coverage and has led more homeowners to use the FAIR Plan as their only option rather than their “last resort” option as it is intended. The number of FAIR Plan policies has increased from 126,709 in 2018 to 272,846 in 2022.
Proposition 103’s consumer protections set California apart from all other states. Even though Commissioner Ricardo Lara said his staff is working to process rate approval requests as soon as possible, carriers are in fact leaving California, actively canceling policies, and no longer writing new policies in Mono County. The list currently includes: Travelers, Safeco, Nationwide, State Farm, Progressive, Chubb, Mapfre, Hartford, Liberty Mutual, Farmers, Guard, Stillwater, Mercury, Great American, MetLife, Kemper, CSE, CIG, Foremost, Aegis, American Modern and Oregon Mutual.
The way Commissioner Lara is applying Proposition 103 doesn’t protect consumers, rather it leaves us with no insurance options. Consumers benefit when there are plenty of coverage options from a robust, balanced insurance marketplace. Under Commissioner Lara’s leadership, consumers across the state have suffered. It is imperative that Commissioner Lara finds the balance so insurance companies want to protect consumers again. Things will get much worse if Commissioner Lara doesn’t take immediate action to turn this crisis around. It is his constitutional responsibility to ensure a healthy insurance market.
We request that Commissioner Lara and the Department of Insurance:
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Remove outdated regulations that prohibit the inclusion of reinsurance costs in determining home & property insurance rates. These regulations force insurance companies to use average historic losses rather than scientific risk models to project future catastrophic losses. Removing these regulatory impediments would create a more competitive market and make the FAIR Plan the option of last resort as intended.
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Work collaboratively with the insurance industry for rate adequacy so California consumers have insurance options. What was once an abundant insurance marketplace in California has become a market of NO options under Commissioner Lara’s leadership.
Thank you for your quick action on this,
[NAME], [LOCATION]