A large luxury home, with storm clouds approaching, representing insurance pullback from certain states.

Home Insurers Policy Pullback Extends Beyond California

Insurance companies are making headlines by pulling back on homeowners’ policies nationwide due to fear of natural disasters and soaring rebuilding costs.

American International Group (AIG) plans to curb home insurance sales to affluent customers in some 200 ZIP Codes across the U.S., the Wall Street Journal reported.

AIG already restricted business in California. Joining the Golden State, high-net-worth homeowners will be most affected in Colorado, Idaho, Montana, and Wyoming out West, and Delaware, Florida, and New York in the East.

Insurers are not just pulling out of the high-end market. Farmers Group stopped offering new homeowners policies in hurricane-prone Florida in a little-noticed pullback. Making more headlines, State Farm and Allstate are pulling back from California’s home insurance market.

According to the WSJ, insurers say regulatory curbs in California on pricing mean they cannot recoup an inflation-driven surge in rebuilding costs and rising losses from wildfires.

Seven of the eight wildfires with the highest insured losses have occurred in California since the start of 2017, according to data

Rising inflation and supply-chain issues have pushed up rebuilding costs post-pandemic. According to the analytics company Verisk, reconstruction costs in California, including labor and materials, have risen 25% since the start of 2020.

According to the industry group American Property Casualty Insurance Association, payouts on claims to California homeowners more than doubled from 2019 through 2022. However, premiums increased by only around a third.

As insurers exit certain markets, they leave homeowners with fewer choices or, in some cases, no choice, according to insurance brokers. Homeowners who can still obtain coverage, especially affluent ones, may end up underinsured.

Premier Private Client Insurance Services are experts at navigating the challenges of the insurance marketplace. Contact us today to speak with an experienced advisor in high-net-worth insurance solutions.