But unlike in other cases where insurers have pulled out of the state, CSE said it wants to organize “soft-landings” for its policyholders with another entity called CSE Diversified Insurance Services.

CSE did not respond to a request for comment, but multiple insurance agents in San Francisco confirmed the company was “non-renewing” policyholders.

Michael Soller, spokesperson for the California Department of Insurance, said his agency is “working on the rate filings that will help transition policyholders to the new company with as little disruption as possible. Earlier this year, the department approved rate filings for CSE to assist this process.”

He described CSE as a “small company representing less than .4% of California’s market.”

CSE is the latest insurer to limit business in or leave California entirely. Since May, several of the largest home insurance providers in California— State Farm, Allstate, Farmers and USAA —have done just that.

The industry blamed these exits on increased wildfire risk, climate change, runaway inflation and a regulatory system that they say makes it difficult to get rate increases. 

Last month, at Newsom’s request, California Insurance Commissioner Ricardo Lara announced plans for a new covenant between the state and the insurance industry: California would allow insurers to use forward-looking modeling in their rate calculations and streamline the approval process in return for insurers covering more homes in areas with high wildfire risk.

The goal was to lure insurance companies back to the state. Lara said the new rules would be drafted by December 2024.

While the insurance industry greeted the news as a positive development, CSE’s decision shows that the end of 2024 is still a long way off.

Lara’s announcement “literally was giving insurance carriers a path forward to becoming profitable again,” said Karl Susman, president of the Susman Insurance Agency in Los Angeles and a commentator on insurance issues. “For a carrier to be pulling out after that announcement tells you they just do not think there’s a path for them to solvency.”

Originally known as the Civil Service Employees Insurance Company, CSE was founded in 1949 in San Francisco to provide affordable coverage to public employees. Today it is headquartered in Walnut Creek and is a subsidiary of French global insurance company Covéa.

According to Christian Iribarren, a San Francisco insurance agent who was friends with the company’s previous CEO, a “good chunk of their book of business was civil servants” back in the 1970s and 1980s. Today, he said, there aren’t that many left.

Regardless, the company’s recent decision will likely be bad news for CSE’s policyholders.

Susman, who does not sell CSE insurance and was not privy to the company’s internal deliberations, said he thinks CSE is pulling up stakes and selling its book of business to a reinsurance or private equity company. CSE Diversified would serve as an intermediary between that company and the consumers.

But that transition will likely increase rates.

“I can almost guarantee you the prices won’t be the same,” Susman said. “If they were, why would CSE leave—right?”

Agents who sell CSE insurance also probably won’t be overjoyed.

“It’s brutal,” one insurance agent who participated in a call with CSE about the decision said in a video he sent to other agents. “Yet another challenging situation.”