Major car insurance companies are moving out of California

Major car insurance companies are moving out of California

Auto accidents are on the rise and some insurance companies say they are paying out more than they are taking in. But, the Insurance Commissioner says that the facts do not support his claims.

According to the American Property Casualty Insurance Association, from 2020 to 2021, auto insurance losses increased by 25%, while premiums increased by only 4.5%. Along with the rate and severity of auto accidents, the cost of covering them has also increased.

"The cost of renting a car is 33% and the cost of a new vehicle is 11%," said Denny Ritter of the American Property Casualty Insurance Association.

In California, some insurers haven't seen a rate increase approved by the insurance commissioner in more than 3 years.

"What we've seen is that you have insurers that are paying more in claims than in premiums. It's not a sustainable business model," Ritter said.

California is a very consumer friendly state and insurers must approve any rate increases. State Farm, Allstate and Farmers are asking the California Department of Insurance for about a 7% premium increase. Progressives are asking for more than 19%. A local agent says insurers are now making it harder for her drivers to get new auto policies.

Carl Sussman of Sussman Insurance said, "They may ask you to pay in full instead of a payment plan. Right now, all the carriers I can think of have restrictions. They literally say, please don't write." "

Geico has closed all of its California offices and Progressive has stopped advertising in the state.

"State Farm, you can't call them and get quotes anymore. You have to go to an agent's office," Sussman said.

A spokesperson for the Insurance Commissioner says, "While insurance companies are focusing on increasing rates, the Department of Insurance is focusing on protecting drivers and helping them get more value from the premiums they pay." Used to be."

His office points out that the commissioner saved Californians $2.4 billion in lower premiums during the stay-at-home order at the peak of Covid—when the industry was still raking in a collective $42 billion in extra premiums.

Insurers can't deny coverage to Californians because of what we call a "take all market," but agents say customers need to go with smaller, lesser-known carriers if they need insurance quickly.