More insurers exit California home & auto insurance markets and the affect is shocking

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Four small insurers will cease writing and renewing homeowners, renters, and auto insurance in California beginning in 2024, according to a filing with the state’s Department of Insurance.

In mid-October, Kemper Independence Insurance Company filed a notice with the state that the company and three insurers it owns will no longer do business in California. Kemper Independence, Unitrin Direct Property & Casualty Company, Merastar Insurance Company, and Unitrin Auto and Home Insurance Company will stop writing new policies as of Jan. 1, 2024, and cease renewals effective March 1, 2024, according to the filing.

Affected policyholders

Kemper Independence, Merastar, and Unitrin Direct Property & Casualty currently provide home, renters, and condo insurance in California. Unitrin Auto and Home Insurance Company only sells private passenger auto insurance in the state.

The withdrawals will affect approximately:

  • 2,900 auto insurance policies from Unitrin Direct
  • 24,500 auto policies underwritten by Kemper Independence Insurance
  • 9,900 homeowners policies from Unitrin Auto and Home Insurance
  • 223 home insurance policies written by Unitrin Direct
  • 110 homeowners policies from Merastar Insurance
  • 33,200 home and fire police by Kemper Independence

Combined, the policies represent about 0.39% of California’s total home insurance market and 0.23% of its auto insurance market, according to filing documents.

“Considering the modest market share, we do not expect this withdrawal will create any market availability issues,” Kemper general counsel Christopher T. Longeway said in the filing.

Impact on California insurance market

As part of its withdrawal from the home insurance market, Kemper Independence and its three subsidiaries will be barred from filing a request to create a replacement program for at least three years, according to a response letter from Gerald Hill of the Department of Insurance.

California’s home insurance market has already taken multiple hits in 2023. Seven of the state’s 12 largest home insurance companies have either limited business in California or withdrawn from the marketplace.

California’s largest home insurance company, State Farm, paused writing new policies, and its second-largest, Farmers, has limited the number of new policies it will write to 7,000 per month.

California’s home insurance costs have risen significantly since 2021, when the average annual cost to insure a $200,000 home in the state was $972. In 2023, the average is $1,056. Keep in mind that the average home value in California is $747,352, according to Zillow.

What’s next

Kemper said it will begin its withdrawal on Jan. 1, 2024, and finish by Feb. 28, 2025. It will continue to service existing business, including paying claims for covered losses that occur while a policy is still in force, according to the company’s filing.

It will notify policyholders by sending non-renewal notices and notifying policyholders’ agents of record.

Affected policyholders can use the California Home Insurance Finder to look for a new agent or insurance company.

This article originally appeared on Insurify and was syndicated by MediaFeed.

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