Inside California's chaotic insurance industry

This is Part 1 of a two-part series. Homeowner's and auto insurance is in a state of flux as multiple factors are crippling the industry and customers

The insurance industry in California is in chaos for both homeowner’s and auto. Industry insiders say it’s a layered problem accelerated by economic factors, not just wildfire risk. Courtesy image

“They are losing their asses.”

This is how industry insiders see the current state of California’s insurance industry as the sector is in chaos due to a multitude of factors, not just from the threat of wildfires.

Major carriers such as State Farm, Allstate, Farmer’s, AIG and others have pulled out, or paused, in writing or renewing homeowner’s and automobile policies due to a financial crisis, according to independent industry insiders who spoke to North County Pipeline.

While wildfire and climate change is a challenge, they are not the main narrative as the catalyst for an imploding market, companies pulling out, or pausing on writing or renewing policies. Instead, red tape from the California Department of Insurance, denials of rate increases, refunds, previous losses due to claims and claims increasing in value are impacting company finances, sources said. The sources asked for anonymity due to potential retribution from the Department of Insurance.