(p. B10) Allstate has stopped offering new home-insurance policies in California, saying it has become too expensive to insure new homes in the wildfire-prone state.
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“The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums,” Allstate said.
It has become increasingly expensive for companies like Allstate and State Farm to insure properties in California. Wildfires in recent years have burned down thousands of homes, driving up costs for insurers who pay for homes to be rebuilt or repaired. High inflation has also made construction more expensive.
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State regulators in recent years have struck down attempts by insurance companies to raise property rates that would offset their inflation costs. The state last year required insurers to drop prices for owners who have fireproofed their buildings. The insurers must set home-insurance rates in California based on their historical loss experience, not future loss projections.
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(Note: the online version of the story has the date June 5, 2023, and has the title “Allstate Stops Selling New Home-Insurance Policies in California, Citing Wildfire Risks.”)