More insurance companies announce plans to leave California

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More insurance companies have announced plans not to renew policies for California homeowners beginning in 2024.

Four companies, Merastar Insurance Co., Unitrin Auto and Home Insurance Co., Unitrin Direct Property and Casualty Co. and Kemper Independence Insurance Co., attributed the move to a nationwide restructuring decision from their parent company Kemper Corp, according to documents filed with the California Department of Insurance.

“The action to be taken by the company is part of a countrywide business decision to exit the preferred personal lines marketplace, one document said. “The Kemper Personal Insurance companies represent a small portion of Kemper’s overall property and casualty insurance business across the country.”

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The documents also stated that the company’s business in California is “relatively small.”

“We made the decision to exit the preferred home and auto business nationwide because it was not a strategic fit within our long-term portfolio,” a company spokesperson told KTLA in a statement.

“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.”

State Farm and Allstate, two larger insurers in the Golden State, also announced that they would stop accepting insurance applications for all business and personal property in statewide earlier this year.

State Farm is the largest property insurer in California, while Allstate was the fourth-largest company in 2021. Company representatives confirmed the news to KTLA in two separate statements.

State Farm and Allstate announced these decisions in the wake of rising business costs and increased risks of natural disasters in the state, particularly wildfires.

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California Insurance Commissioner Ricardo Lara announced new insurance protections in effect for the summer wildfire season that increases payouts and evacuation benefits for wildfire survivors in 2021. The new protections would mean “larger payouts for some claims and less red tape from insurance companies,” according to Lara.

Last year, the commissioner enforced the new insurance pricing regulation under the Safer from Wildfires framework, requiring insurance companies to provide discounts to consumers who follow safety measures such as upgraded roofs and windows to prevent wildfire risks.

The new regulation aims to reduce insurance costs and create consumer risk rating transparency.

The state doesn’t require potential homeowners to have insurance; however, many mortgage lenders may require some proof of insurance as a loan condition.

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