As California grapples with another season of wildfires, the impact on the state’s insurance market has become increasingly dire.
The simple fact is that home insurance in California has been underpriced for a long time. Since 2013, California home insurers have spent an average of $1.08 for every $1 in premiums collected. CSAA Insurance Group, specifically, paid out $1.14 for every dollar of premiums received in 2023, and we had to tap into reserves to pay claims to our customers.
The regulatory environment is challenging as well. California is among a handful of states that require a lengthy approval process for any rate change, which doesn’t make for an agile marketplace. In addition, California regulators have not allowed the use of forward-looking climate change models to set insurance rates and instead have relied on increasingly obsolete historical data.