Justin Boggs
Why is there controversy over mortgage fees?
Loan-level pricing adjustments are the government's way of raising prices for so-called "riskier" borrowers without putting a penalty on "safer" ones.
LEARN MOREPosted: 9:54 a.m. EDT Jun 5, 2023
Allstate has become the latest insurer to no longer issue new home or property insurance policies in California.
State Farm made a similar announcement last month that it would no longer offer new property insurance in California, citing the state’s wildfire risk and construction costs outpacing inflation.
Those who go to Allstate’s website and enter a California ZIP code are told the company does not offer property insurance there.
The San Francisco Chronicle was first to report Allstate’s decision to leave California. Allstate told Scripps News it stopped selling insurance to California property owners in November.
"We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers," Allstate said. "The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums."
According to Cal Fire, there were 7,490 wildfires in California in 2022, resulting in 362,455 burned acres, nine fatalities and 876 structures damaged or destroyed. A year prior, 3,846 structures were damaged or destroyed in 7,396 wildfires.
Last year, California Insurance Commissioner Ricardo Lara submitted new insurance pricing regulations requiring insurance companies to provide discounts to consumers and other certain protections. Among them, insurance companies face a mandatory one-year moratorium on canceling or not renewing residential insurance policies in certain areas.
The protections also promised larger payouts for some consumer claims, less red tape from insurance companies, and more help for people under evacuation orders.
“My department is laser-focused on doing everything we can to protect consumers and hold insurance companies accountable,” Lara said last year. “My groundbreaking regulation will help more Californians find insurance they can afford. It aligns insurance discounts with fire safety actions being expedited by our state emergency leaders and local governments. And, most importantly, it will save lives by helping California become safer from wildfires.”
Insurers say the new rules make things more challenging to quickly adjust prices in instances of high inflation.
