California Insurance Carriers Update Allstate Says No New HO Policies
Two California insurance carriers are now not writing new policies in certain lines of insurance.
As I predicted in last week’s article on State Farm leaving California, another major carrier has not stopped accepting new insurance applications. Yes, as seen in the nationwide worker’s comp insurance crisis of the 1990s, California insurance carriers have no obligation (except for Assigned Risk) to remain writing new business in states where the risk outweighs the premium.
Why would Allstate cease writing Homeowner’s policies – check out its shareholder’s statement from December 2022.
- Net loss applicable to common shareholders was $694 million in the third quarter of 2022 compared to the income of
$508 million in the prior year’s quarter, primarily due to an underwriting loss and equity valuation declines.
- Adjusted net loss* was $420 million, or $1.56 per diluted share, compared to adjusted net income* of $217 million
generated in the prior-year quarter. The decline reflects increased claims severity, higher unfavorable prior year
reserve reestimates, and lower net investment income.
The $1 billion swing from a $694 million income to a $508 million loss in just one year shows that changes can occur very rapidly with a California insurance carrier or underwriting in any state.
That makes two MAJOR California insurance carriers that have ceased writing new policies in within a few weeks’ time. According to USA Today, Allstate ceased writing new homeowners’ policies last year. Wow, that was a quiet move.
Our HQ state – North Carolina saw large insurance carriers leaving the state in droves due to an NC Supreme Court decision that gave basically all worker’s compensation files lifetime medical benefits – later fixed with the passing of a bill that corrected the decision.
Bottom Line – California Insurance Carriers
Yes, I am mixing California insurance carriers with other states and lines of insurance – homeowners vs. workers comp. The main takeaway is that an insurance carrier writing coverage in any state can cease at any time.