Why Insurers Are Fleeing California

Regulators won’t let companies charge for growing risks

WSJ editorial. Excerpts:

"State Farm General Insurance Co. last week became the latest insurer to retreat from California’s homeowners market. The culprit isn’t climate change, as the media claims in parroting Sacramento talking points. The cause is the Golden State’s hostile insurance environment."

"“historic increases in construction costs outpacing inflation"

"AIG and Chubb, have also been shrinking their California footprint after years of catastrophic wildfires"

"Wildfires in 2017 and 2018 wiped out two times the underwriting profits that insurers had accrued over the prior 26 years."

"insurers raise premiums to account for increasing wildfire risks. California is the only state that requires insurers to set premiums based on historical experience."

"insurers must base rates on prior decades when wildfires were less frequent and intense"

"a new mandate by Mr. Lara to provide discounts to homeowners who implement 12 wildfire “mitigation measures,”"

"insurers worry Mr. Lara won’t let them raise rates on other homeowners to offset these mandatory discounts,"