January 5, 2022
California Nonrenewals in 2022
Will California experience less homeowner nonrenewals in 2022 vs 2021
Why are California Consumers Receiving nonrenewal notications?
What is trend in home and liability insurance in the state?
What is an Insurance Nonrenewal?
Simply put a nonrenewal is an official insurance notification that the current insurer will not renew your next years policy. This definiition is in some ways not the complete definition, but for most folks its accurate enough. Essentially a nonrenewal more often than not, means that you need to go find a new insurance company at the end of your current policy term.
California has recently seen a spike in homeowners nonrenewals, in part due to the increase wildfire activity.
California Homeowner Nonrenewal Activity:
According to the California Department of Insurance: “the number of homeowners non-renewed by insurance companies fell by 10 percent statewide in 2020 compared to the previous year.” I am sure that by some technical definition this might be true, this is in direct contrast to what Marindependent Insuance Services has witnessed. The brief article goes on to state: “The number of non-renewals by insurance companies fell from 235,597 in 2019 to 212,727 in 2020 – a decrease of 22,870 policies”
There are a number of issues with leaning on this information to heavily:
- This does not account for policies not offered to new owners of properties.
- This does not account for change of occupancy types, not supported by insurers.
- A current nonrenewal moritorium by certain Zip codes are/were in place.
- Other hidden ways home insurance companies dont allow a policy to stay in place
- Various other reasons, too complex to consider.
- The decreasing new admitted policies being issued in this state.
The report also states the following: “The data represented approximately 98.8% of the homeowners’ insurance market in the state” and “non-renewals by insurance companies affect less than 3 percent of California policyholders…”
Nonrenewals in the San Franisco Bay Area:
In our experience a signficant percentage of San Francisco homeowners are being hit with nonrenewals. Being that we are a unique agency our percentages probably are not statitically useful, but its upwards of 6% to 8% I would guess. Certainly higher than this 3% number. Marindependent sees no end in sight to the homeowner nonrenewal situation.
More than just home insurance Nonrenewals in California:
But wait…. there is more. Its not just home insurance non renewals that are happening in the great state of California. We are seeing increased non renewals in other non commercial lines as well. These include personal liablity or personal umbrella insurnce cover.
Personal Umbrella Nonrewals:
Recently the personal liablity market has become more complex. Some insurers are reducing the amount of coverage while others are just leaving the state in a given market. One carrier specifically, who shall remain nameless, has required such ardous underlying limits as to make the situation commical. Another insurers is limiting the amount of coverage offered.
Earthquake Insuarnce Nonrenewals:
Recently we have seen earthquake policies nonrenewed by one insurer specifically. Earthquake as many people know is typically not covered byt most home insurance policies. Currently replacing one earthquake insurance company with another is usually not a problem. Contact us for more details.
Nonrenewals of Flood Insurance:
The market for flood insurance is especially fluid, no pun intended. LIkley there has never been more flood insurance options for consumers. Mosty non admitted in nature there are lots of options. But some flood insurance nonrenewals have been issued in California.
Other Nonrenewals in California:
Commercial insurance policies, in addition, are also being nonrenewed. The reasoning for these is exceptionally varied. Wildfire property risk, increased liablity exposure, higher defense costs are three such reasons that may this market may be changing.
How to Watch our For Nonrewal Forms:
Any insurance company that wants to stop insuring you or your property likely will send you some form of a legal notice. Typically these forms can via the US Mail. Therefore it is imperative that consumers open ALL US MAIl. Open your mai even it if appears to be junk mail.
In addition watch our for your renewal documentation at each and every renewal period. If you dont get one, contact your insurer or your insurance agent.
What to Do it you Get a Nonrenewal:
If you receive a nonrenewal notice from your insurer, please feel free to contact us or reach out to another independent insruance agent or broker. As far as homeowners insurance is concerned often the best option is a FAIR/Companion policy option.
Where is the California Insurance Market Headed in 2022?
California is the largest state in the US and almost by defitition is the largest Insurance market. However many insurance companies are reconsidering being in this state with certain lines of insurance products, chiefly Homeowners Insurance. If the past is any guide in conjunction with recent wildfire activity throughout the west, it would seem that non renewals of home and umbrella insurance are just going to go higher. While there are various potential solutions out there, which are too complex to explain, none seems on the verge of happening. Hence Marindependent beleives that nonrenewals fo several classes of insurnace are likely to just grow in 2022.
