4 more insurers are leaving California after Allstate and State Farm flee wildfire risk

Chris Morris, Alena Botros

It’s getting harder to find insurers in the coastal states.

Four home insurance companies say they will not renew policies for people in California starting next year. That follows similar decisions by Allstate and State Farm dating back to last November. Allstate is still offering home insurance coverage to current customers and auto insurance to new and current customers but paused condo and homeowners insurance policies to new customers in California last November.

The most recent move is by smaller insurers. Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company, and Kemper Independence Insurance Company plan to non-renew policies.

The companies say the decision was part of a restructuring of their parent company, Kemper Corp., to exit the “preferred” home and auto market—an industry term referring to a tier of risk.

That’s different from the Allstate and State Farm withdrawals, which were due in part to the state’s wildfires as well as inflation.

The impact on housing

The four insurers make up less than 1% of the state’s homeowners insurance market. Still, more insurers withdrawing from California, or at least reducing their presence in the state, could spell trouble for the housing market.

John Burns Research and Consulting’s vice president of research and demographics, Eric Finnigan, previously told Fortune that a survey of homebuilders found that buyers are concerned over the cost and availability of homeowners insurance in their region, which in turn is somewhat slowing sales. For instance, in Northern California, 20% of homebuilders surveyed, at the time, said that buyers’ concerns over property insurance are somewhat slowing sales, and in Southern California, 29% of builders said as much. Nationally, only 9% of builders said that insurance concerns were somewhat slowing sales. And it doesn't help that California is dealing with its own affordability crisis of insurance woes.