Following a trend in the property market, major auto insurers are reportedly pulling back in California.
Insurers say California drivers are just too expensive to insure and are paying out more money than they are taking in. However, the California Department of Insurance refutes their claims.
According to the American Property Casualty Insurance Association, auto insurance losses across the country spiked by 25%, while premiums increased by only 4.5% from 2020 to 2021.
Additionally, costs are growing to cover auto accidents. Auto repair and maintenance costs double the rate of overall inflation, jumping 13% compared to 6.5% inflation in December 2022, according to data compiled by APCIA.
“The cost to rent a car is up 33%, and the cost for a new vehicle is up 11%,” Denni Ritter, a Vice President at the American Property Casualty Insurance Association, told CBS Los Angeles.
California is very consumer-friendly, and regulators must approve any rate hike. State Farm, Allstate, and Farmer’s are asking the California Department of Insurance for a nearly 7% premium increase. At the same time, Progressive is asking for more than 19%, according to reports.
A spokesperson for the Insurance Commissioner told CBS LA, “while insurance companies are focused on increasing rates, the department of insurance is focused on protecting drivers and helping them get the most value from the premiums they pay.”
Insurers cannot refuse to cover Californians as the state is a “take all market.” Still, some agents told CBS LA they have to go with lesser-known insurers if clients need insurance quickly.
Read more about the auto insurance pullback at CBS Los Angeles.