Got a question for you. Let’s just say you are a CO of a homeowners insurance company, you’re using your family’s money, you’re living in the state of California, and every single policy that’s being written is losing money for you.
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How much longer until you stay in the state of California and say, “Guys, we’re leaving the state of California, it’s just not worth it for us,” because right now, it looks like California is doing everything in their power to push out every single homeowners insurance company in the state of California?
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Here’s why: California has 40 million people living there, of which 55% own a home. However, in 2023, nearly 7% of all real estate deals in the state fell out of escrow.
Do you know why? Because the buyers couldn’t afford the insurance. They’re like, “I just can’t afford to pay the homeowners insurance here, it makes no sense, I’m out, I’m not buying it.” Matter of fact, seven insurance companies in the state of California—State Farm, Allstate, Farmers, USAA, Travelers, Nationwide, and Chubb—recently limited new homeowners policies.
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It’s so bad that in 2022, Allstate quietly paused writing new home and condo policies. In an email to Bankrate, here’s what Allstate said: “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums.
Why the hell would anybody keep doing business in California when it comes to homeowners insurance the way they’re going? Do not be surprised when all of these guys eventually say, “We’re done with the state of California.” We’re going to talk about that today. If you get value out of this video, give it a thumbs up and subscribe to the channel.
I got a question for you. So, wildfires are measured by acres. Matter of fact, right now, while you’re watching this, there are 52 active wildfires in America being managed this year. So far, roughly 2.1 million acres of America have experienced wildfires. Now, go to 2023. If I were to ask you, “Total number of acres of wildfire in America, where would you rank it on how bad last year was in the last 25 years?” What would you say?
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Would you say the worst, maybe the second worst, maybe the third worst? What if I told you in 2023, it’s the least amount of acres of wildfire in the last 25 years? Let me give you the data here so you can verify it. According to the National Interagency Fire Center, last year, we had roughly 2.693 million acres of wildfire.
Go to the last year: 7.5, 7.1, 10 million acres in 2020, then it’s 4.6, 8.7, 10 million acres in 2017, and it’s 5 million, 10 million acres in 2015, 3 and a half, 4.3, 9.3, 8.7, 3.4, 5.9, 5.2, 9.3, 9.8, 8.6, 8 million, 3.9, 7.1, 3.5, 7.3, 5.2. The last time we had fewer acres of wildfire in America was in 1998. That means 25 years it’s been the lowest ever.
Yet, this great state of California thinks, “Guess what, we’re going to force you, you better do this or else.” So, guess what insurance companies are doing. Let me give you stories. May of 2023, State Farm announced it will no longer accept new business and personal property and casualty applications.
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Allstate, State Farm credited historic increases in construction costs outpacing inflation, rapidly growing catastrophic exposure, and a challenging reinsurance market. By the way, March the following March, State Farm stated it would non-renew around 30,000 home insurance policies beginning July 3rd of 2024.
Farmers came out and said, “Look, moving forward, new policy applications are going to be limited due to record-breaking inflation, severe weather events, and reconstruction costs.” From the summer of 2023 to the summer of 2024, five other companies just said, “Guys, we’re done.” AmGuard, Falls Lake, Hartford, Tokio Marine Insurance Company, and American National stopped writing new homeowners insurance policies in California, putting immense strain on the home insurance market.
This is driving California homeowners insane because they’re like, “Dude, I can’t even buy homeowners insurance. Where do I buy this stuff from? You need it to buy the house. I can’t even figure this thing out.” Combined, State Farm, Allstate, Farmers, USAA, Travelers, Nationwide, and Chubb dominated just under 35% of California’s home insurance market in 2023. However, they’re sitting around saying, “I don’t know if we can handle this moving forward if it keeps going like this.”
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