Multiple insurance carriers—across homeowners and auto lines—have scaled back or exited the California market. Here’s who’s leaving and why:
1. State Farm
- Stopped writing new homeowners policies in California (May 2023), and in high-fire-risk zones even nonrenewed existing policies LG areas like Pacific Palisades
- Cited rising construction/replacement costs, increased wildfire exposure, and a challenging reinsurance market vox.com
2. Allstate
- Ceased issuing new home policies in late 2022/early 2023 due to wildfires, rising rebuild costs, and inability to shift risk-based costs to consumers under strict CA regulations articlesfactory.com.
3. Tokio Marine America & Trans Pacific Insurance
- Filed to pull out of homeowners and umbrella policies in April 2024—nonrenewals began July 2024 and finish by Aug 2025
4. Other carriers like Chubb, AIG & Farmers
- Chubb reduced presence in wild‑fire areas in 2021–2022; AIG also pulled back on high-value home policies
- Farmers limited new policies starting 2023
🚗 Auto Insurance
1. Allstate & Farmers
- Both scaled back auto insurance; Allstate stopped writing new CA policies, and Farmers dropped roughly 100k California auto customers mid-2023
2. GEICO & Liberty Mutual
- Closed offices or withdrew auto coverage due to high claim frequency and severity investopedia.com
3. AIG & Kemper (and AmGUARD, Falls Lake)
- Also exited – AIG stopped several lines since 2022; Kemper’s affiliates pulled both auto and home policies starting late 2023 insurancebusinessmag.com
📉 Why Are Insurers Leaving?
- Climate-driven disaster risk
- Exploding wildfire losses: 15,000+ wildfires in CA (2021–23) blog.tsibinc.com+5sfchronicle.com+5articlesfactory.com+5; Jan 2025 Palisades/L.A. fires projected to cause up to $150 billion in economic damage nypost.com+2vox.com+2en.wikipedia.org+2.
- Tight insurance regulation
- Proposition 103 restricts insurers from passing rising reinsurance or rebuild costs to consumers, compressing margins thetimes.co.uk+14.
- Rising rebuild and reinsurance costs
- Construction inflation and global reinsurance premiums doubling since 2018
- Profit pressure
- Companies reportedly paid out more than they collected—$1.09 in claims per $1 premium thetimes.co.uk.
🔄 What’s Being Done – and What It Means for You
- State reforms: California regulators currently allowing insurers to pass reinsurance costs to rates in exchange for underwriting in fire-exposed areas .
- Risks ahead: Expect higher premiums (30–40% increases projected), and tighter requirements like roof upgrades or defensible space rules for renewals
- FAIR Plan reliance: Many displaced homeowners are turning to the FAIR Plan—California’s insurance-of-last-resort—but coverage is limited and often more expensive. FAIR’s liabilities could trigger surcharges state-wide
What You Should Do
- Shop around early: Don’t wait for cancellations—start comparing policies now.
- Prepare your home: Insurers are closely evaluating fire risk—actions like clearing brush, roof maintenance, and defensible space could improve chances for renewal .
- Stay informed on industry rule changes: New rate-pass policies are rolling out—premiums may rise soon, but may also stabilize the market.
- Consider FAIR Plan as backup—but note its limitations and potential future surcharges.
California is in the midst of an insurance market shake-up—younger climate risks and rate controls have forced several major carriers to exit. While reforms aim to stabilize things, expect fewer options, stricter requirements, and higher costs going forward.