Allstate, California's fourth-largest insurance provider, announced this month that it will no longer issue any new home insurance policies.
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The state's largest home insurance provider, State Farm, had already announced the same decision last month. Both companies are blaming climate change and inflation, saying they can't make money here.
"The cost to insure new home customers in California is far higher than the price they would pay for policies," read a statement issued by Allstate.
The moves are sparking statewide concerns about possible jumps in home insurance premiums, while sparking harsh criticism from Los Angeles-based Consumer Watchdog.
"They're not losing money. Their profits in California on homeowners insurance are four times the national average," said the group's founder Harvey Rosenfield. "Over the last 20 to 25 years, they've take in tens of billions of dollars more than they've paid out in claims during that time."
Rosenfield is the author of California's Proposition 103, which has been regulating the state's insurance companies since the proposition was passed 35 years ago. He said Prop 103 allows insurance companies to charge a reasonable rate and make a reasonable profit.
But the insurance industry, Rosenfield said, is pushing for steep rate increases that are not justified, and Allstate and State Farm are trying to force California Insurance Commissioner Ricardo Lara to allow them.
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"This is extortion but it's not real," said Rosenfield.
California's Department of Insurance declined ABC7's interview request, instead issuing a statement that reads:
"The Department of Insurance is focused on protecting consumers. Insurance regulators across the nation are dealing with the impacts of climate change-intensified natural disasters on consumers and companies.
We have been here before after major wildfires. What's different now is our actions in California with the first-ever insurance discount program for wildfire safety and unprecedented wildfire mitigation investments by the Legislature and Governor.
Historically, the Department of Insurance has seen companies pause and then re-start writing policies as conditions change. More than 115 insurance companies currently offer California homeowners' insurance. The Department of Insurance is driven to ensure consumers have the most options to meet their insurance needs.
No non-renewals are taking place with either State Farm or Allstate's announcements. The factors driving State Farm's decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation."
However, Rosenfield said Lara has the authority under Prop103 to declare an emergency and force Allstate and State Farm to resume selling homeowner insurance policies or risk being banned from selling all other forms of insurance in California.
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"If he does not enforce the law, this will become a tsunami and it will have a devastating impact on California consumers and upon the economy," Rosefield said.
Rosefield said Lara needs to step in and tell Allstate and State Farm that if they want to continue selling any other kind of insurance in the state - they need to sell homeowner policies as well.
"It's clear to us that the insurance industry is in the middle of a boycott of the state of California," said Rosenfield. "They want uncontrolled rate increases."
Should homeowners fail to find a company to insure their home they can always turn to California's FAIR Plan, which is coverage provided by a pool of all the insurers in the state. But the FAIR Plan is really considered a last resort option.
The plan's own website even describes it as "temporary" and in most cases it will cost you more than standard coverage.