[smohnot]

Cali is tough- the regulator is really standing in the way of a functioning market and is driving insurers away... Allstate stopped writing new policies in Nov 2022 and said they would pull out of the state entirely unless they could increase rates drastically... so they were allowed this increase.

The 2017 and 2018 wildfire seasons wiped out nearly two times the combined underwriting profits for California homeowners’ insurers for the prior 26 years… it’s acceptable to have large losses in this business but you need to have years of gains to offset them. CA is the only state that doesn’t allow for consideration of reinsurance costs in ratemaking.

CA requires insurers to underwrite using historical data from the past 20 years (which doesn’t include housing growth in high-risk regions or increased fuel load following years of drought and poor fire suppression strategies) to determine catastrophe losses vs predictively modeled data incorporating climate change. It is the only state that disallows forward-looking models when pricing wildfire risk.

Until California does something to ensure that the prices of insurance reflect the risk (letting them use modern catastrophe models, letting them price in reinsurance, approving rate filings in a timely manner), insurers will continue non-renewing folks and pulling out of the state altogether. It filed the rate increase in April 2023 and was just approved. In the meantime, Allstate has not added a single new homeowner in the state.

[yobbo]

Wouldn't the prior 26 years in california include multiple huge wildfires?

[ornornor]

I suspect they’re getting more and more frequent so the last 26 years alone don’t accurately model the future risk.