Allstate has quietly discontinued new home insurance policies in California

The hiatus began last year, but seemed to only receive a passing mention in industry publications. The Chronicle learned of the development this week, after reviewing Allstate’s rate increase request to the California Department of Insurance.

It wasn’t immediately clear what prompted Allstate to backtrack on the new policies. But State Farm, California’s largest provider of property and casualty insurance, made waves in late May by announcing that it would stop issuing new homeowner policies in the state due to inflation, wildfires and rising reinsurance costs.

That Allstate quietly did the same thing last year suggests that the state’s insurance problems may be more severe than the public realizes.

“State Farm is unusual in that it has announced such underwriting actions. An association of insurers, the California Personal Insurance Association, said Rex Frazier, in an email to The Chronicle over the weekend:

Frazier said Thursday that the only public disclosure required of insurers retracting their eligibility in the state comes when they ask the California Department of Insurance to increase rates.

At least two other insurers, AIG and Chubb, cater to upscale homes, Coverage has been pulled for some clients in recent years.

Consumer advocates note that there are still more than 100 insurance companies doing business in California, even as many of the big names have pulled out.

But homeowners in high-risk fire areas may have difficulty finding coverage, which leads to more use of the FAIR plan, the state’s “insurance of last resort” intended as a temporary safety net that covers only fire insurance and generally costs more. from other plans.

Many insurance companies have already stopped renewing policies in fire-prone areas after fires in 2017 and 2018 devastated communities and led to huge payouts.