In a move that has sparked concern among homeowners in California, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. have announced their decision to withdraw from the state’s homeowners insurance market. This decision comes as a response to the increasing costs associated with wildfire risks in the state.
The two companies will not be renewing a total of 14,180 policies, including 12,556 homeowners policies and 1,624 dwelling fire and liability policies, with a combined premium value exceeding $11 million. The non-renewal of these policies is set to take effect from July 1, leaving homeowners to seek coverage elsewhere.
Tokio Marine cited outdated technology and a small personal lines book size as reasons for their exit from the homeowners marketplace. This move follows in the footsteps of other major insurers such as State Farm, Farmers, and Allstate, who have also limited their exposure in California by either reducing new policies or tightening underwriting standards.
The state of California has been facing a homeowners insurance crisis, largely due to climate change and catastrophic wildfires. Efforts are being made in Sacramento to reform the system in order to make the market more appealing to insurers. However, consumer advocates are worried about transparency and the possibility of insurers including reinsurance and future wildfire costs in their premiums, which could lead to excessive costs for homeowners.
Despite the significant number of policies being impacted by Tokio Marine and Trans Pacific’s decision, experts suggest that the overall impact on the market may be limited. Nevertheless, the withdrawal of these companies adds to the growing challenges faced by homeowners in California in securing affordable and comprehensive coverage in the face of increasing wildfire risks.
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