Farmers Insurance announced that it has resumed accepting new commercial multi-peril applications in California for auto service and repair, homeowners, manufacturing, real estate and wholesale distribution insurance.
The move follows the insurer group's recent decision to lift a temporary moratorium on writing new commercial auto insurance policies in the state.
“Farmers have been operating in California for nearly a century, and while challenges remain, we are encouraged by the positive changes occurring in the state's commercial insurance market,” Eric Coleman, president of Business Insurance for Farmers, said in a statement.
Farmers said it is working with the California Department of Insurance on a plan to re-enter the commercial insurance market after temporarily halting offering coverage for some new business policies.
“We have consistently believed that as a fundamental condition of offering insurance, premium rates must reflect the risk exposure insured. We are fortunate that through constructive discussions with CDI, we are ready to take steps towards returning to the market,” Coleman said.
Farmers said it plans to start accepting applications for new commercial multi-peril insurance policies again on Aug. 1.
Farmers also began restricting new homeowners insurance policies in California last year, following the withdrawal of several other insurers.
Home insurance rates have risen in California, and there are concerns about the availability of insurance as many insurers pull out of wildfire-prone states. Proposed solutions to the crisis include finding ways to speed up rate applications, allowing insurers to use reinsurance rates when applying, and allowing the use of catastrophe models to set premium rates.
Many of these proposals reflect growing interest in changing Proposition 103, a 1988 voter-approved law that requires prior approval by the California Department of Insurance before property insurance rates can be implemented.
Calls to amend Proposition 103 are growing as insurance companies withdraw from selling homeowners insurance in the state.
State Farm said in May last year that it had stopped accepting new property and casualty insurance policies in California, citing rising risks from wildfires and inflation. Last month, State Farm said it would not renew 30,000 homeowners, renters and other property policies in California.
The Hartford said in January it would stop writing new homeowners insurance in California. Liberty Mutual will stop offering business insurance products in wildfire-prone states in July 2023, and Farmers began limiting its underwriting of new homeowners insurance in California that same month.
The pressure appears to have even spurred the state's top regulator to act. In addition to CDI's efforts, California Gov. Gavin Newsom said at a state budget press conference last week that he was working to speed up the rate application process, a move that was applauded by insurers.
The American Property Casualty Insurers Association, which has long called for reform of Proposition 103, praised Governor Newsom's comments.
“We thank the Governor for shedding light on this important issue,” said Denny Ritter, vice president of state government relations for the APCIA division. “Expediting the rate review process is a key component of addressing California's insurance crisis. We look forward to working with the Administration, Legislature and Department of Insurance on this important reform and others needed to fix our broken regulatory system and increase the availability of insurance for California homeowners, drivers and businesses.”
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