I’ve been working in the insurance industry for just over 36 years and coming up on 33 years as an agency owner. I have navigated my insurance agency through many changes in the industry over the years, including the Fire Insurance Moratorium in California following the Northridge Earthquake in 1994, when 93% of major insurance carriers stopped issuing fire insurance policies or severely limited what they wrote for a two-year period until the California Earthquake Authority was established in 1996. The nearly two-year moratorium caused the California housing market to go into a tailspin from the trickle-down effect to the real estate industry, as homeowner insurance was hard to come by, which limited the number of transactions.
Fast forward to 2023 and it’s happening again, only on a much bigger scale in California. The majority of insurance carriers are once again halting or limiting the insurance policies they write or leaving the state completely. However, it’s not just the home insurance market, it’s also the commercial and auto insurance market as well. What’s going on, you ask? Major wildfires in the last five years are driving home insurance increases and causing companies to non-renew policyholders, forcing some policyholders in high fire line areas to take out a California Fair Plan policy, a policy established to help those that are unable to receive a traditional fire insurance policy.
According to Cal Fire statistics, the majority of the Largest, Deadliest, and most Destructive California Wildfires have occurred in the last five years. After the large amount of rain California accumulated this past winter, we are anticipating another difficult fire season over the next few months of this year. Also consider post Covid-19 issues, Inflation, rising costs of labor and materials, the increase in frequency and severity of claims in Auto & Home Insurance, and reinsurance costs to the industry (Yes, insurance companies have to pay additional insurance that’s implemented in larger disasters, such as wildfires and hurricanes/tornadoes), and you can see why our state is in this predicament. Lastly, we are currently dealing with the first Tropical Storm Warning in California in 84 years as I’m writing this article, thanks to Hilary.
What can you do as consumers? Recently, a well written Public Service Announcement regarding the current state of the insurance industry with excellent advice was placed on social media and shared by a number of local agents, including myself. Here are a few helpful items from that article to help you navigate the current insurance climate and hopefully save you a little money and better protect your assets.
*Consider Higher Deductibles. This will help you save some money on your policy.
*Discount Reviews-make sure you’re getting everything you’re entitled to. Every insurance carrier has different discount opportunities. Make sure that you review those with your agent.
*Bundle your Auto and Home for more discounts and stable pricing. Bundled/Packaged policies generally include better coverage and benefits, and the cost savings is usually 10-20% (or more) on each policy.
*Consider tenure: Jumping companies too often will hurt you in the long run. In addition, some carriers won’t take you if you have less than two years with your previous carrier. And more importantly, some carriers are getting off risks that have multiple claims in a 3 and sometimes 5-year period.
*Stay with a strong company and agency/brokerage. Not only do you want to be with a company that will pay your claims, but you also want to be with a local agency that is available to answer your calls and questions regarding your current coverages, discounts, and any other customer service needs.
*Try not to get a traffic ticket, but if you do, take advantage of traffic school. A traffic citation can have a huge impact on your rates, especially if you have multiple citations/accidents.
*Absorb small claims when you’re able and save coverage for catastrophic losses. It’s important that you speak with your agent and let them counsel you if a claim should be reported to the company.
Please remember that we are agents for the carriers. Agents/Brokers don’t make the rules, we don’t have control over the rates, and we don’t make the decision if your policy is cancelled by the carriers. We are here to help educate, make sure that you have the best insurance for your situation, manage your account with the carrier, and help counsel you with claims when needed. We are doing our very best to manage the many changes our carriers are implementing with our customers’ needs. Hopefully this explains a little bit of what’s going on in the current insurance marketplace. Please be nice to your insurance agent and their staff. They are also taking the same increases, navigating carrier changes, and doing their best to help you through this difficult time.
Craig Davis is the owner of the Craig Davis Family Agency. He has been serving customers in California since 1990 and has a local office in Temecula in the Adobe Shopping Center.