Homeowners Insurance: What to Expect in 2024

The property insurance market in California continues to constrict, leaving very few insurance companies still writing new policies and several other insurance companies non-renewing their policies as they exit the state.

As an independent agency, we represent numerous insurance companies. One of our carrier partners, NatGen Premier, is currently in the process of non-renewing their property policies and another partner, Nationwide Private Client, announced they will start non-renewing all policies starting in June of this year. Those two companies join Kemper, AIG, MetLife and others who have pulled out of California.

Several other insurance companies, such as State Farm, Allstate, and Cincinnati, are currently not writing any new home policies.

There are only a few admitted companies remaining that are writing new home policies. Admitted insurance companies are those whose rates are controlled by the California Department of Insurance and whose policies offer the best coverage at the best rates. Those that are writing new policies have imposed tight quotas and restrictions on the new policies. Homes must be located away from canyons and open space, with no claims in the last five years, and of newer construction or have documented updates to plumbing, electrical, heating and roof.

If an agent cannot find an admitted solution for you, they will seek alternatives in the non-admitted marketplace. Non-admitted insurance companies are large, financially stable companies, but, because they are not admitted in the state, their rates are not subject to review and approval by the Insurance Commissioner, so they have more flexibility in pricing policies. The rates these companies charge can be as high as two to five times as much as the expiring premiums charged by admitted carriers.

As a last resort, coverage can be placed through the California Fair Plan. The Fair Plan policies only insure against the peril of fire, though, and the amount of coverage is limited to $3,000,000 of total insurance (so typically a home with a maximum rebuilding cost of $1,500,000.) Their policies are expensive and require the consumer to purchase a second policy, known as a Difference in Conditions policy, to cover the other perils of wind, water, theft, liability, etc.

In September, the governor declared a State of Emergency regarding property insurance, and the Insurance Commissioner, Ricardo Lara, promised to expand the consumers choices and stabilize the market. He also promised to improve the efficiency, speed, and transparency of the rate approval process. The crisis that is affecting every California homeowner is because the Department of Insurance has suppressed the rates insurance companies can charge for the last five years. Frustrated by an antiquated rate approval process combined with increased wildfires and their resulting claims, insurance companies are choosing to no longer sell policies at a loss.

The solution is simple: the Department of Insurance needs to approve rate increases for the admitted insurance companies. If these companies can charge a fair rate, they will reopen in California. Consumers need to have a choice of companies and products. There needs to be affordable options for home buyers, homeowners with losses, older-home owners and those who live near canyons and open space.

We encourage you to contact the insurance commissioner, Ricardo Lara, and copy the governor, Gavin Newsom to demand an update. What tangible actions has the commissioner taken in the last four months? How many new employees have been hired to review rates? Have any insurance companies had their rate requests approved? Has the time to approve rates been reduced? Which admitted insurance companies are writing new property policies? When can Californians expect to see insurance companies open back up for new business?

If enough concerned citizens make their voices heard and keep up the pressure, change can happen. Contact information for the Insurance Commissioner and Governor is below.

Ricardo Lara, California Department of Insurance
300 Capitol Mall, 17th Floor
Sacramento, CA 95814
Main line: 916-492-3500

Governor Gavin Newsom
1021 O Street, Suite 9000
Sacramento, CA 95814
Phone: (916) 445-2841

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