(Bloomberg) — California’s already strained property insurance market is facing a new challenge as two more insurers, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co., plan to withdraw from the wildfire-prone state entirely starting in July.
The two companies, units of Japan-based Tokio Marine Holdings Inc., disclosed their plans in filings submitted to the California Department of Insurance. They said the decision will affect 12,556 policies with premiums of $11.3 million.
The companies didn’t cite a reason for pulling out of the market, but major insurers across California are ending or reducing coverage as the state grapples with risks posed by wildfires and other natural disasters fueled by climate change.
Read more: California to Give Insurers Leeway to Set Rates on Fire Risk
The disclosure of the exit comes just a few weeks after State Farm General Insurance Co. said it will be cutting about 72,000 policies in July, just nine months after announcing it would stop offering new coverage. Several other companies have either paused new policies or will no longer offer new ones, including Allstate Corp., The Hartford, Farmers Insurance and United Services Automobile Association.
To stabilize the market and coax insurers back to California, Insurance Commissioner Ricardo Lara last year announced a new regulatory overhaul to allow insurers to factor future climate risks and reinsurance costs into their pricing. In turn, insurers will be required to offer more coverage in fire-prone areas. Many of the details have yet to be released, and the earliest the plan could go into effect is December.
Tokio Marine America and Trans Pacific didn’t immediately respond to requests for comment.
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Published: 18 Apr 2024, 11:30 PM IST