California homeowners market tightens further: Farmers caps uptake

The California homeowners insurance market got ever tighter on word from the state's #2 player that it won't mop up any of the demand piling up as other major players back down from new business.

Farmers Insurance stopped short of a ban on new business, but said it would cap the pace of new business to meet its prior market share trend.

“Effective July 3, Farmers will limit new homeowners insurance policies in California to a level consistent with the volume we projected to write each month before recent market changes,” a Farmers’ spokesperson has said.

Farmers cited “record-breaking inflation, severe weather events, and reconstruction costs continuing to climb” in justifying its decision to restrain its pace of growth.

California likely has plenty of unsatiated demand for insurers to sweep up.

State Farm, the #1 California admitted insurer with an 8.7% market share across all P&C lines and a head-turning 21.2% of the multi-peril homeowners market, made the big splash with its end-May announcement it won't be accepting new business in the state aside from automotive.

Allstate, California’s #4 P&C insurer overall and #6 in homeowners multi-peril with a 6.1% market share, followed suit within a week’s time.

Recent reports have also highlighted curbs in place at Nationwide and AIG as well.

Comments come just as California is beginning to hint at flexibility on the key regulatory stance which the industry claims blocks rate adequacy.

The industry has long complained of California regulations that indirectly exclude risk modelling by tying rates to moving averages in loss trends. That stance goes on the table in the coming week as the state regulator opens an industry workshop examining catastrophe modelling.

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