If price controls are implemented with sufficient rigor, shortages will inevitably result. Homeowners in California are discovering this the hard way.
According to West Hawaii Today, The biggest provider of homeowner’s insurance in California is State Farm. It declared in May that it would no longer be considering requests for new policies. Odd, that. Companies with a dominant market position rarely abandon ship. State Farm currently appears to be a trendsetter, though.
The second-largest player, Farmer’s Insurance, is limiting the number of new homeowner policies it issues. The No. 4 company, Allstate, has stopped selling. Keeping up with the migration is challenging. Associated with Berkshire Hathaway is AmGUARD Insurance. In 2022, Berkshire Hathaway held the third-largest market share. At the conclusion of this year, Liberty Mutual, which is ranked No. 5 on that list, will not renew business owner coverage.
READ ALSO: United States Recession Might Happen As Jobs Go Up While Wages Go Low And Purchasing Power Lowers
It shouldn’t be difficult to comprehend why this is taking place. These businesses are struggling to turn a profit for some reason. The situation is so bad that they think giving up the market share they’ve spent years and a ton of money building will be more profitable.
According to ABC News, another titan of the insurance industry, Allstate, stated in November that it will stop issuing new business, homes, and condo insurance policies in California in order to safeguard its present clients.]
The unsteady market in California is consistent with national trends where businesses are raising prices, restricting coverage, or withdrawing entirely from areas vulnerable to wildfires and other natural disasters in the age of climate change. Following significant storm destruction, Florida and Louisiana have had a difficult time maintaining robust insurance markets. In Colorado, rates are increasing due to the threat of wildfires, and an Oregon effort to map the risk of wildfires was denied last year due to concerns that premiums would soar.
According to scientists, the West has become warmer and drier over the past three decades due to climate change, and this trend will continue to increase weather extremes and the frequency and destructiveness of wildfires. The biggest and worst fires California has ever seen have occurred in recent years.