Another home insurer leaves California, highlighting the state’s escalating struggle with climate disasters. The Hartford Financial Services Group announced it will stop issuing new homeowners insurance in California from February 2024.
The Hartford Financial Services Group, a major provider of business, home and automotive insurance, will no longer write new policies for California homeowners starting on Feb. 1. https://t.co/5zef2mgYNE
— The San Francisco Standard (@sfstandard) January 24, 2024
Hartford cited California’s unique insurance challenges as the reason for their exit. Their decision underscores the escalating issues that both homeowners and insurance providers face in regions increasingly prone to climate disasters, especially in wildfire-ravaged areas.
“Based on these challenges and our analysis of the trends, we have decided to stop offering new homeowners policies starting Feb. 1, 2024,” the statement read. “We do not enter into this decision lightly, and we appreciate and support efforts like Commissioner [Ricardo] Lara’s Sustainability Insurance Strategy to help bring stability to the market. We will be watching those efforts closely.”
California’s heightened wildfire concerns, with 13 major fires since 2017, add to the insurance challenge. The Hartford, with less than 1% market share, will continue offering other insurance products in California.
Existing policyholders of The Hartford should check their eligibility for renewal. Homeowners should expect rising insurance rates, with Farmers Insurance Group and USAA imposing significant increases in 2023.
The insurer’s exit follows similar decisions by State Farm and Allstate. Both cited increased wildfire risks and rising costs as reasons. The Insurance Information Institute noted 1.265 million California homes at risk for extreme wildfires in 2022.
Other small carriers like Merastar Insurance Co., Unitrin Auto and Home Insurance Co., and Kemper Independence Insurance Co. also announced non-renewal of policies in 2024.
The exit of major insurers from California, similar to recent trends in Florida, leaves many homeowners struggling for coverage. Florida residents now face the highest premiums in the U.S., averaging $4,218 annually, nearly double the national average. There are growing sentiments that homes in certain parts of the U.S. are becoming “essentially uninsurable” due to extreme weather.
California is actively working to strike deals that will keep insurers from pulling out completely. Yet, it’s clear that the home insurance sector has been permanently reshaped. Notably, State Farm has halted the writing of new property insurance policies in certain states, a decision prompted by the increasing risks tied to climate change.
As the economic fallout from climate risks intensifies, more Californians find themselves without viable home insurance options. With each successive wildfire season, the reality of climate risks becomes starkly evident, forcing insurance companies to recalibrate their business strategies.
Image Source: The New York Times
