California non-renewals down 10% but wildfire-prone areas most challenging

Non-renewals of California homeowner policies fell by 10% state-wide in 2020 compared with the year prior, chiefly as moratoriums instituted by state authorities pushed business into an insurer of last resort mechanism, the  California Department of Insurance said in a report.

The number of non-renewals by insurance companies fell from 235,597 in 2019 to 212,727 in 2020 – a decrease of 22,870 policies – while the number of new and renewed homeowners’ policies issued by the voluntary market state-wide increased from 8.62 million to 8.7 million, or an increase of 82,635 policies, the department said. The non-renewal rate was 3%, higher in wildfire-prone regions, the department said.

"Mandatory moratoriums by Insurance Commissioner Ricardo Lara made up more than 80% of the state-wide reduction in non-renewals," the department office said in a press statement covering the report.

The FAIR Plan, an association made up of insurance companies that serves as California’s “insurer of last resort,” covered the gap with a consecutive year of gains to an all-time record high. FAIR increased its policy count by 25% in 2020 to reach 241,466 new and renewed policies, some 3% of the market.

“While we still have a way to go until we have an insurance market that works for all Californians, I remain focused on increasing home safety measures to protect homes and promote market competition while strengthening the FAIR Plan, California’s insurance safety net, so it better addresses consumers’ and businesses’ coverage needs,” Lara said.

The FAIR Plan expects 2021 to end with further growth, the department of insurance claimed, citing a local media report.

Commissioner Lara implemented a series of temporary one-year moratoriums on non-renewals under a state law that he wrote as state Senator.

“Temporary non-renewal moratoriums are essential to California property owners and communities as stakeholders work to reduce wildfire risk and restore available and affordable insurance options,” said Amy Bach (pictured), executive director of United Policyholders.

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