San Francisco Chronicle | October 31, 2023
Four more home insurance brands leave California.
Four small insurers plan to nonrenew California home policies starting in 2024.
The four companies — Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company, and Kemper Independence Insurance Company — each cited a nationwide restructuring decision from their parent company Kemper Corporation, according to a document filed jointly this month with the California Department of Insurance.
The moves were “part of a countrywide business decision to exit the preferred personal lines marketplace,” according to the filing.
“Personal lines” insurance refers to policies for a family or individual, and “preferred” describes a tier of risk the insurance company assumes.[…]
The decision to end preferred home policies nationwide was not swayed by any specific state, said Barbara Ciesemier, vice president of marketing and communications for Kemper Corporation. She said exiting the preferred home and auto market will allow the company to refocus capital on specialty auto and life businesses, which continue to serve California residents and small businesses.
The rationale is different from recent pullout decisions by major insurers like Allstate and State Farm, which have cited the increasing damage from wildfires as a key factor in their decision to stop issuing new home policies in California in particular.
Kemper Independence Insurance Company will completely withdraw from all lines it writes in California, including auto, residential and dwelling fire; Merastar will withdraw from residential insurance; Unitrin Direct Property and Casualty Insurance Company will withdraw from residential and renters insurance; and Unitrin Auto and Home Insurance Company will withdraw from homeowners policies.
None of the companies is a major player in the state’s homeowners insurance market, as together they make up less than 1% of the homeowners insurance market share. The largest of the four subsidiaries is Kemper Independence Insurance Company, which holds about 33,200 homeowners and dwelling fire policies in California.
“Considering the modest market share, we do not expect this withdrawal will create any market availability issues,” the filing stated for all companies.
Earlier this year, the California Department of Insurance required Kemper Independence Insurance Company to issue more than $1.5 million in refunds to California homeowners who the department deemed were overcharged for wildfire coverage, according to a Department of Insurance news release.
The companies will continue servicing claims for existing customers but will provide non-renewal notices as policies naturally expire, according to the filing. The companies anticipate completing a full withdrawal from California by Feb. 28, 2025.
The California Department of Insurance has made an attempt to bring more insurance options back to the state, though the advocacy group Consumer Watchdog has criticized the plan as being too lenient on insurance companies.
Under the plan, Insurance Commissioner Ricardo Lara said companies must write at least an average of 85% of their California market share in high wildfire risk communities by December 2024, but Consumer Watchdog said last week that the 85% rule can be waived and that some policies offered in the wildfire risk zones may not be much better than what homeowners can get from the government-created FAIR Plan, an insurer of last resort.