Many insurers in California have been cutting back on their homeowner businesses and now two major companies, who offer protection for affluent homeowners, are pulling their policies.
According to a recent Wall Street Journal article, American Internatinonal Group Inc. will be notifying around 9,000 customers in its Private Client Group that their home policies won't be renewed this year.
AIG's move is reportedly part of their plan to stop selling home policies in California through a unit regulated by the state's insurance department.
Many experts cite the wildfire exposure and frustrating state regulations as some of the reasons insurers are pulling coverage.
“AIG is the first high-net-worth carrier to say ‘we’ve had it, we’re divorcing ourselves from California’s regulated market,’ ” said Jim Tolliver with Woodruff Sawyer & Co.
Chubb Ltd is also continuing to non-renew some of its policies but is "still accepting new customers across the state in areas where we have a fair chance of earning an adequate return," said vice-chairman Paul Krump.
Luckily, two state laws that took effect in 2022 protect California wildfire victims from non-renewal actions.
According to Forbes, Senate Bill 872 "requires an advance payment by home insurance companies for at least four months of additional living expenses."
Another law, Assembly Bill 2756, provides additional insurance for disaster survivors to rebuild and requires transparency regarding policies that don't cover wildfire losses.
It's not all bad news for California homeowners though. The Wall Street Journal reports that companies like Allstate Corp. and Farmers Insurance have actually committed to adding policyholders.