By Nadia Lopez | Bloomberg
Allstate Corp. will end its years-long pause on underwriting in California as soon as the state regulator adopts proposed regulatory changes to make it easier for insurers to raise rates, according to a company spokesperson.
“If the regulations were in effect today, we would begin selling new homeowner insurance policies tomorrow,” said Gerald Zimmerman, senior vice president of government relations for Allstate, in a public hearing on April 23. “Let me repeat that: As soon as we can use catastrophe modeling and incorporate the net cost of reinsurance into our rates, we will be open to business in nearly every part of California.”
Also see: California commissioner, Farmers CEO ‘look outside’ for answers to insurance crisis
The company will offer coverage “in nearly every corner” of California, Zimmerman said. The testimony marks the first time a large property insurer has publicly promised a return to the market in the disaster-prone state if the new regulations are implemented.
More than half of the major property insurers in California have cut back on business in the state in recent years in response to the increasing severity of wildfires, as well as state regulations that limit the cost of policies.
Allstate confirmed in a statement to Bloomberg News that it seeks to increase its market share in California, but rates must “fully reflect the cost of providing insurance to consumers” before agreeing to lift its current restrictions. The new rules will allow for rate increases that the company says will ensure they can pay customers’ claims in the event of a fire, according to the statement.
Also see: State Farm shedding 72,000 home insurance policies in California
Insurance Commissioner Ricardo Lara says the proposed reforms, which would not need legislative approval or to be signed by the governor, represent the biggest changes to the state’s insurance market since 1988. Specifics have been scant and the overhaul is still in draft form, but Lara expects the process to be complete by the end of the year.
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