Following years of non-renewals by midrange insurers, AIG and Chubb are starting to cut coverage for multimillion-dollar homes in California, according to a Wall Street Journal report.
Affluent homeowners will feel the sting of non-renewals starting this month. AIG will reportedly soon begin notifying about 9,000 customers in its Private Client Group of their non-renewal status.
Frustrated by state regulations and concerned about wildfire risks, AIG is looking to cut back on its state-regulated policies. However, some homeowners will be eligible for insurance through another AIG unit in the excess-and-surplus lines.
Surplus lines insurers have more flexibility on policy terms and rates than insurers in the tightly regulated California insurance market do. As a result, the excess-and-surplus policies could cost homeowners three to five times what AIG clients pay now.
“AIG is the first high-net-worth carrier to say ‘we’ve had it, we’re divorcing ourselves from California’s regulated market,'” Jim Tolliver, an insurance broker in San Francisco, told the WSJ.
Meanwhile, Chubb, the largest high-end insurer in the state, continues to non-renew some of its policies. According to the WSJ, Chubb will also offer excess-and-surplus policies to homeowners who face non-renewals.
In an October earnings call, Chubb Chief Executive Evan Greenberg said, “someone else will have the pleasure of writing” business in California for which “we cannot charge an adequate price for the risk.”
When finding the right coverage is challenging, having a trusted insurance advisor is crucial.
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