Allstate shuts down CA Homeowners

[spencer5150]

Effective midnight tonight, Allstate now gets swallowed up in the CA fiasco.

Allstate to Pause New Homeowners Business in California

The fourth largest U.S. carrier has told agents it will temporarily stop offering new homeowners policies in California and plans to stop offering new commercial business in the Golden State and four others in 2023.

By Eva Thomas, Varada Bhat|November 1, 2022
Beginning Nov. 2, Allstate will pause new business for homeowners insurance in the country’s most populous state, California, according to an internal memo to its agents that was viewed by P&C Specialist. The memo, however, said homeowners and condo insurance would continue to be offered through its subsidiaries Ivantage and North Light Specialty Insurance Co.

In addition, the No. 4 carrier said in the memo that Allstate Business Insurance would stop accepting new business in California, Florida, Louisiana, New York and New Jersey from Jan. 1, 2023. The action is in “response to industry-wide cost pressures,” according to the memo. From Jan. 1, Ivantage will be used to quote commercial business.

It was not known whether the memo was sent to the company's independent agents.

Allstate did not immediately respond to a request seeking comment.

Ivantage is an insurance brokerage and North Light offers non-admitted coverage. According to a report from S&P Global Market Intelligence earlier this year, North Light wrote $44 million in E&S premiums in California in 2021.

The memo follows other actions taken by Allstate in the Golden State. In July, Allstate restricted business in California and reportedly told agents they would not be allowed to write new homeowners policies in certain zip codes across the state. In August, the Northbrook, Illinois-based personal lines giant paused all personal new policy sales for branded personal lines products through independent agents in California, as reported.

 

[dcyshy]

@spencer5150 California has been incredibly difficult about raising rates, despite inflationary pressures, so it's not surprising.

 

[spencer5150]

@dcyshy We thought Geico dropping CA off the face of the earth was bad, this is another big hit from a top 5 carrier. All eyes on State Farm still, they’re still eerily quiet…

 

[cammi2018]

@spencer5150 State Farm has been eerily quiet and also accepting a ridiculous amount of high value homes in very high wildfire risk areas. Same with Farmers. Guess we’ll just have to wait and see how it all plays out…

 

[kimv]

@cammi2018 They don’t want to lose their number 1 auto spot so I can’t imagine they will stop

 

[spencer5150]

@kimv I’m still unable to find Q2 and Q3 losses / earnings publicized. Everyone else got put on blast for losing hundreds of millions, I can’t imagine #1 is on the up and up.

 

[kimv]

@spencer5150 I don’t think they publish anything until February the next year so it might be a while till we find out. I can’t imagine it being very good though with Ian and knowing they are one of the top writers in Florida homeowners.

 

[spencer5150]

@kimv Just saw it announced today, $4.57 BILLION loss in Q3 alone, the largest quarterly loss they’ve had in over 20 years. If they don’t make a massive move pretty quickly, I can’t imagine their agents will be greeted with a pleasant “change” in the near future.

 

[kingspal1]

@spencer5150 I know Allstate's loss ratio in California last I heard was around 130%. State Farm's is probably right around there. I don't see how insurance companies will be able to keep doing it there.

 

[spencer5150]

@cammi2018 THIS! That good publicity can’t be sustainable when a wildfire comes through.

 

[spencer5150]

@cammi2018 Got some insider info last night outta nowhere. Effective immediately (but still quiet and not public YET), State Farm no longer writing ANY non good-driver or youthful operator).

 

[resjudicata]

@spencer5150 Anyone see the correlation in the states they’ve stopped writing in?…

I can’t speak to LA (no experience there) but NY & NJ make rate changes very difficult for carriers. I know NJ wouldn’t allow too much rate at a time so the carriers “workaround” was to hit insureds with rate increases every 6 months…

 

[resjudicata]

I know some companies specifically avoid LA because of the legal environment. They’re consistently ranked in the ATRF’s Judicial Hellholes report

As for CA (& NY/NJ but I have less personal experience with those states), they make it notoriously difficult to bump up rates. Not to mention, CA’s rate filing forms are unnecessarily complicated and time-consuming to complete

Edit: also objections out to Wazoo

 

[elizar123]

@resjudicata Legal issues are moreso auto than home. Home insurance is due to hurricanes.

 

[resjudicata]

@elizar123 I didn’t even think about that — makes perfect sense with the risk involved in covering that

 

[williamis]

@elizar123 Yeah, but this is business insurance - which includes auto but also CGL, professional liability, employee coverage, etc.

That's definitely a product of the legal environment, which is ... friendly to the litigious, to put it mildly (or barely above legalized extortion, to put it less charitably).

 

[elizar123]

@williamis I mean... drive down I-10 from the Texas border to New Orleans and half of the billboards you see are for personal injury attorneys.

Going back all the way to Morris Bart in the 90s, they've brainwashed Louisiana residents that the proper steps when you're involved in an accident, even just a mild fender bender is to call a personal injury attorney, and then call the insurance company. Those attorneys then just make blanket requests for the max payout on the policy, and negotiate down from there.

 

[kimv]

@resjudicata I’d venture reinsurance costs are way up particularly in LA and FL after many bad cat years so they’ll have to reduce their exposure in other ways such as not writing new business

 

[karl947]

@kimv The capacity is shrinking and its driving up rate even more. The ILS market is also shrinking, compounding the problem.

 

[lords_servant_02]

@resjudicata I practiced insurance defense law in Louisiana (both commercial auto claims and commercial property claims) up until this past July.

The environment for insurers is brutal in Louisiana. The climate is difficult (hurricanes, flooding, thunderstorms, etc), which causes a large number of property and auto claims. This is made worse by the fact that the courts and law are heavily policyholder-friendly (though not as bad as some states, like Florida). Finally, Louisiana is one of the poorest states—which means that not only do people not have the ability to pay premiums, but it also means they disproportionally rely on insurance payouts to cover their medical costs, home repair costs, etc.

The end result is a self-perpetuating cycle of rising insurance premiums and lower insurance payouts, which fuels litigation and fraud, which further raises premiums and encourages insurers to not treat their policyholders fairly.

Compounding all of this was the triple-whammy of Delta, Laura, and Ida - all of which caused an enormous amount of damage in the state that the insurers simply were not prepared for.

Louisiana is an absolute hellhole for the insurance business, and thus is a hellhole state to be a policyholder in. There’s a reason I left that state before hurricane this year.