By Katie Rodriguez, San Francisco Examiner
Insurance companies pull out of California
Several major insurance companies including Farmers Insurance, State Farm, Geico and Allstate announced this year that they were leaving California, increasing their rates, or capping their policies due to the higher risks posed by natural disasters. Worsening wildfires, the most cited offender, were putting the business models of these companies on shaky ground, they said, creating a trickle-down effect affecting housing risk coverage, mortgages and, subsequently, car insurance.
State Insurance Commissioner Ricardo Lara announced plans to improve market conditions for California consumers, backed by an executive order from Newsom urging the creation of a regulatory plan to protect communities most affected by climate change. Part of this plan includes having companies use climate models (as opposed to historical models) to assess risk, and transitioning homeowners and businesses from the FAIR Plan to the normal insurance market.
Consumer Watchdog claimed the three home-insurance providers exited California in a coordinated effort in order to increase insurance premiums, prompting the advocacy group to urge Attorney General Rob Bonta to investigate whether the departure strategy is an attempt to secure a state bailout.
