The California homeowners insurance market faces further strain with the departure of two additional companies. Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. have opted not to renew their customers’ home insurance policies, as confirmed by the California Department of Insurance in correspondence with KQED. Notices of nonrenewal will be dispatched to customers during the upcoming summer months.
Although the scale of these departures is comparatively modest, covering approximately 12,000 homeowners collectively, concerns persist regarding their potential impact on the availability of insurance. Jazmín Ortega, deputy press secretary for the state’s insurance department, reassured KQED that the withdrawal of these companies, given their limited market share, is not anticipated to significantly disrupt the California insurance landscape, as alternative options remain accessible to consumers.
However, their exit exacerbates an ongoing crisis in insurance availability. Presently, over 90% of companies within California’s admitted insurance market either refrain from offering new property insurance or impose stringent restrictions. Data compiled by the Susman Insurance Agency and shared with KQED reveals that approximately 70% of companies listed in the California Department of Insurance’s Home Insurance Finder tool are presently not extending new plans.
While the specific motivations behind Tokio Marine America Insurance Co. and Trans Pacific Insurance Co.’s withdrawals were not disclosed in filings submitted to the state’s Department of Insurance, unlike other companies such as State Farm and Allstate which have cited wildfire risks, their decision to withdraw from both homeowners and personal umbrella insurance markets suggests a broader strategic realignment. Both companies, subsidiaries of Tokio Marine Holdings, Inc., a Japanese conglomerate, appear to be contemplating a complete departure from the California market.
Broker and insurance expert Karl Susman expressed concern over the timing of these departures, particularly as it exacerbates reliance on the FAIR Plan, California’s insurer of last resort. The FAIR Plan offers coverage when no other insurer will, albeit at a considerable cost and with limited policy benefits. Its rapidly expanding membership, now receiving approximately a thousand applications every 24 hours, strains its resources and raises fears of insolvency in the event of a major disaster.
The timing of these departures coincides with ongoing efforts by the state to overhaul insurance regulations through the Sustainable Insurance Strategy, an initiative aimed at improving conditions for insurance companies. While many of these proposed changes are welcomed by the insurance industry, their implementation is still underway. The upcoming hearing on April 23 will address catastrophe modeling, representing a crucial step in this regulatory transformation.
Broker Karl Susman emphasized the urgency of stabilizing the insurance market before carriers can resume competitive operations. The impending regulatory changes, once fully enacted by the end of the year, are anticipated to facilitate a return to normalcy in the insurance landscape, enabling companies to effectively underwrite and compete once again.
