Four small insurers intend to stop renewing California home insurance coverage in 2024.
According to a document filed jointly this month with the California Department of Insurance, the four companies, Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company, and Kemper Independence Insurance Company, each cited a nationwide restructuring decision from their parent company Kemper Corporation.
The actions were “part of a countrywide business decision to exit the preferred personal lines marketplace,” according to the petition.
“Personal lines” insurance refers to policies for a family or individual, and “preferred” describes a tier of risk the insurance company assumes.
According to Barbara Ciesemier, Kemper Corporation’s vice president of marketing and communications, the decision to eliminate preferred house policies countrywide was not influenced by any single state. She stated that abandoning the preferred housing and auto markets will let the company to refocus capital on specialty auto and life companies, which will continue to serve California people and small businesses.
The reasoning differs from previous pullout decisions by big insurers such as Allstate and State Farm, which cited rising wildfire damage as a primary factor in their decision to stop offering new home policies in California in particular.
Kemper Independence Insurance Company will discontinue all lines of business in California, including auto, residential, and dwelling fire insurance; Merastar will discontinue residential insurance; Unitrin Direct Property and Casualty Insurance Company will discontinue residential and renters insurance; and Unitrin Auto and Home Insurance Company will discontinue homeowners policies.
None of the firms is a large player in the state’s homes insurance market, accounting for less than 1% of the market share. Kemper Independence Insurance Company is the largest of the four subsidiaries, with approximately 33,200 homeowners and dwelling fire insurance in California.
“Considering the modest market share, we do not expect this withdrawal will create any market availability issues,” the filing stated for all companies.
According to a Department of Insurance news release, the California Department of Insurance ordered Kemper Independence Insurance Company to repay more than $1.5 million to California residents who were overcharged for wildfire coverage.
According to the lawsuit, the companies will continue to service existing customers’ claims but will issue non-renewal warnings as policies inevitably expire. The corporations plan to complete their withdrawal from California by February 28, 2025.