Allstate shuts down CA Homeowners

[resjudicata]

@lords_servant_02 Thank you for the detailed response. This was very helpful.

 

[lords_servant_02]

@resjudicata Of course! It is a really miserable state for anyone in the insurance business - and it’s getting worse. The writing is really on the wall that insurers will pull out of LA… the premiums are ridiculous and insurers still can’t afford all of the claims.

My homeowners premium dropped by 80% (not exaggerating) when I moved out of Louisiana.

 

[lesterlom]

@spencer5150 Next headline: Progressive no longer offers P&C Insurance in California.

I wouldn’t be shocked if that happened.

 

[spencer5150]

@lesterlom We heard their non-standard auto was shutting down soon but so far they’re still writing. They’re too 3, and they’ve gotta be bleeding badly too

 

[onangelwings]

@spencer5150 I've said it before and I'll say it again: Tom Wilson ruined Allstate.

 

[wagingwar]

@onangelwings Who?

 

[nadine777]

@wagingwar Biff from Back to the Future. All his car crash claims into manure bankrupted the company.

 

[karl947]

@spencer5150 No one that works in insurance should be surprised as this is just a continuation of the march towards E&S subsidiaries gulping up market share in states with insurance depts that are hostile to carriers.

Edit: E&S is a work around. Carriers need proper rate to operate. Yes, it’s hard on consumers, but it’s a lot worse when your carriers operate at 120 combined ratios, burn through their surplus, have to write less business to maintain capital adequacy, and shrink statewide capacity. Some state insurance depts need to work better alongside the HO carriers in their state to keep market capacity alive.

 

[owens266]

@karl947 How do E&S subsidiaries outperform in this environment as opposed to a carrier?

 

[android17ak47]

@owens266 E&S are not constrained by filed rates (which must be approved). So if Allstate needs a 25% rate increase, CA might only approve 6.9% (or none at all). So off to the E&S subsidiary it goes

 

[karl947]

@android17ak47 This is the answer.

 

[karl947]

@owens266 I’m gonna assume you don’t work in the industry, because if you do you should already know the answer to this.

 

[resjudicata]

@spencer5150 California represents a massive market … I suppose pulling out of the market is definitely one option for insurers that are not happy about the lack of rate increases, but it would not surprise (but would disappoint) me to see these same insurers return with gusto in a year, and trample over each other in an effort to win back market share … the ones who stick it out feel like they’ll be the winners (at a risk of course: a massive catastrophe and the ones who left will certainly look like winners…)

It’s either that or they cede revenue growth / opportunity completely to competitors, and that just doesn’t feel all too likely.

 

[nadine777]

@spencer5150 Is there an article for this?

 

[spencer5150]

@nadine777 This is a cut and paste directly from PandCspecialist.com

 

[nadine777]

@spencer5150

PandCspecialist.com

Thank you!

Edit: I actually don't have access on their website to see the link

 

[trmof]

@spencer5150 Do you have access to the affected zip codes?

 

[spencer5150]

@trmof The article explains it’s ALL of California effective midnight tonight. The specific zip code moratorium was just a temporary fix a few months ago, now it appears they’ve pulled the entire state.

 

[trmof]

@spencer5150 this really doesn't bode well for my in-laws trying to sell their home right now.

 

[spencer5150]

@trmof It just means the new buyers are going to have one less company to choose from. Still plenty of carriers out there, but one by one they’re all tightening restrictions. Mercury just announced TODAY they’re implementing a 15 day underwriting “review” period on Home Insurance too, and they’ve been known to be extremely cheap. It’s definitely going to get worse before getting better.