Allstate, one of the nation's largest insurance companies, has joined State Farm in deciding to halt sales of property and casualty coverage to new customers in California, saying it's too pricey to underwrite policies in the state which has seen thousands of natural disasters in recent years.
Allstate quietly stopped issuing new policies in California months ago, but didn't announce the move until Friday. Allstate was the fourth-largest insurer in California, according to the most recent 2021 state data. It earned $4.3 billion in premiums that year and incurred $2.6 billion in losses.
"We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers," Allstate told CBS News in a statement Friday. "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."
In 2021, California experienced at least 7,396 wildfires, which burned nearly 2.6 million acres of land, according to the California Department of Forestry and Fire Protection. The state had an additional 7,490 wildfires that burned 362,455 acres last year.
According to the California Department of Insurance (CDI), insurance companies that cover property may be required under California law to cover living expenses such as emergency shelter and food, personal property and valuables, as well damage to the property and other buildings or structures on it; the removal of trees, shrubs and debris, and water damage not caused by a flood. Allstate said the state doesn't allow insurers to quickly adjust their rates to cover the increased costs for disasters.
Allstate's announcement comes just days after another major insurer said it was backing out of new home policies in California.