Natural catastrophes, inflation, and reckless driving have all contributed to an increase in insurance prices across the country. Of course, insurance companies don’t want to cover anyone, especially residents of California, according to Oakland’s Fox 2. And it’s becoming an issue.
According to industry analysts, insurance firms are losing money on coverage. Not just a little money, but a lot.As a result, in order to manage the hemorrhaging of revenue (and, sadly, for consumers), firms are reducing or outright refusing to cover California people, as one expert revealed to Fox 2.
“A lot of companies are running a more than 100% loss ratio,” explained president of Oakland-based Barbary Insurance Brokerage Jerry Becerra. “So that’s unsustainable over the long-run.”
Becerra said there were many factors to contribute including, the number of accidents being up, as well as a rise in the costs associated with collision repairs.”There was a dip in driving during the pandemic, but that’s rebounded,” said Becerra, so the incidents of crashes have also rebounded. “The cost of repairing vehicles is higher than it used to be due to inflation, type of vehicles, supply chain issues, a lot of things may be driving that,” Becerra explained.
He also pointed to increased events of natural disasters, noting property damage from extreme weather events often included damage to vehicles.
Insurance firms intended to raise rates to compensate for such big losses. But that’s not easy in California; rate increases must be reviewed and approved by the state’s insurance commissioner, something insurance firms aren’t thrilled about.
They want rate hike reviews completed more quickly. The American Agents Alliance, an organization that represents independent insurance agents, appears to be citing insurance companies’ refusals to cover drivers as evidence of the need for rate increase evaluations to be completed more quickly.
As a California resident, I can attest that shopping for estimates and even getting insurance is quite tough. Every major insurance company either refused coverage because I was a Hyundai owner — entirely ignoring the fact that Hyundai released a repair for the engine immobilizer, making the cars more difficult to steal — or simply stated that they don’t do business in California.
When I finally found a provider that would cover me, they limited my insurance to state minimums and told me I had to wait 30 days before expanding to full coverage for reasons I don’t fully understand.
Regardless, individuals are urging state authorities to act, since some experts predict that things will worsen for California drivers and the insurance sector. When you consider that state regulations need insurance coverage as well as insurance coverage for car registration, and no one is willing to cover drivers, things are on the verge of unraveling.
