Partnership Insurance Agency

California, the most populous state in the United States, has seen an exodus of home and auto insurance companies in recent years. The trend, which began in 2019, has accelerated in 2023 - most recently State Farm and Allstate - leaving many Californians wondering why and what impact it will have on them. In this article, we explore the reasons behind the insurance companies' departure and what it means for California consumers.

First, and the most significant reason behind the departures, is California's increasing wildfires. According to the California Department of Forestry and Fire Protection, wildfires cost California over $52 billion in the past five years. With the threat of wildfires increasing every year, many insurance companies are finding it difficult to sustain their business in the state. Insured losses from wildfires rose to $12 billion in 2018, up from $2.7 billion in 2017. With rising insurance claims, companies are finding it difficult to balance their books, leading them to pull out of the market.

Another reason for the exodus is the rising cost of auto insurance claims. California is a litigious state, and car owners are more likely to sue for damages in the event of an accident. This led to an increase in the cost of claims, making it unprofitable for some insurers to continue to do business in the state. As a result, they are pulling out of the market, leaving car owners with a narrower range of options.