![The exodus of home insurance companies in California continues 1 The exodus of home insurance companies in California continues](https://www.trendfeedworld.com/wp-content/uploads/2024/05/The-exodus-of-home-insurance-companies-in-California-continues.jpeg)
Two more insurers are pulling out of California's troubled homeowners insurance market, putting pressure on a market that has already seen the withdrawal of several other companies that have cited higher costs related to wildfire risks.
Tokyo Marine America Insurance Co. and Trans Pacific Insurance Co. have filed with the California Department of Insurance saying they will not renew the policies of 12,556 homeowners with a premium value of $11.3 million As of July 1, 1,624 residential fire and liability policies with a premium value of $1.7 million that are typically sold to rental property owners, as well as personal umbrella coverage, will also not be renewed.
The companies, subsidiaries of Tokyo-based Tokyo Marine Holdings, are exiting the homeowner market entirely. Several major insurers, including State Farm, Farmers and Allstate, have since limited their exposure to California by cutting back on the number of new policies they issue or by tightening underwriting standards. For example, State Farm announced in March that it would not renew 72,000 policies.
In deciding to withdraw from the so-called personal lines market, Tokio Marine cited the reason that the “technology underpinning the personal lines industry is at the end of its life. Due to the small size of our personal lines book and the excessive financial burden of the costs of updating necessary automation, we are unable to continue to support our personal lines business,” the company said in filings with the Department of Insurance.
Department spokesman Michael Soller said the decision would have limited impact on the market because of the small number of policies.
Tokyo Marine Holdings, a unit of Japanese conglomerate Mitsubishi, did not respond to an emailed request for comment.
California's homeowners insurance crisis has been growing for years as climate change and extreme weather events have contributed to catastrophic fires that have destroyed thousands of homes. An effort is now underway in Sacramento to solve the problem through a series of reforms that have pitted the insurance industry and consumer advocates at odds.
Insurance Commissioner Ricardo Lara is trying to make the market more attractive to insurers by allowing them to include the cost of reinsurance and future wildfires in their premiums. Consumer advocates are concerned that the methodology for estimating the costs of future fires will not be sufficiently transparent and will burden homeowners with excessive premiums. They are also against passing on reinsurance costs to homeowners.