While State Farm decides to completely withdraw from the home insurance market for California, state residents are left with fewer and fewer choices.

The common headline regarding insurance companies reducing or completely eliminating the coverage they offer in California seems to focus on corporate greed. The reality is that the issue is state specific. The California Insurance Commission sets the rules by which insurers have to operate within the state. So maybe it has more to do with that.

The Rules Matter:

If you are expected to play a game, the rules of that game matter. For home insurance providers, those rules have gotten to the point where it simply does not make sense to continue to participate in California. That should worry you – because it touches ALL insurance, not just home insurance.

Fewer Insurance Providers – Higher Costs:

California is faced with diminishing numbers of insurance companies that are willing to do business in the state. If those in charge in California wanted to actually bring insurance costs down, they would change the rules so that more insurance companies want to participate in the states market.

Don’t Trust Headlines:

The vast majority of headlines out there clearly want to imply that the fault lies with the insurance companies themselves. Almost NONE of them address the elephant in the room, which is the rules and regulations imposed on the insurance industry by state regulators.

Links:

• https://www.reckon.news/news/2023/03/insurance-companies-are-fleeing-climate-vulnerable-states-leaving-thousands-without-disaster-coverage.html
• https://www.cbsnews.com/losangeles/news/auto-insurance-companies-pull-out-of-california/
• https://californiaglobe.com/articles/like-a-good-neighbor-state-farm-isnt-there-state-farm-to-longer-accept-any-new-property-casualty-insurance-applications-in-ca/
• https://www.city-journal.org/article/californias-coming-insurance-crisis