Farmers to Resume Offering Key Lines of Business Insurance in California

Farmers Insurance said it will resume accepting new business commercial multi-peril applications for auto service & repair, habitational, manufacturing, real estate and wholesale distribution policies in California.

The action follows the insurer group’s recent decision to lift its temporary moratorium on writing new commercial automobile insurance policies in the state.

“Farmers has operated in California for nearly a century, and while challenges remain, we are encouraged by the positive changes taking place in the state’s commercial insurance marketplace,” Eric Coleman, president of Business Insurance for Farmers, said in a statement.

Farmers said it has been working with the California Department of Insurance on plans to re-enter the business insurance market after a temporary pause in offering coverage for a subset of new business insurance policies.

“We have been consistent in our belief that a fundamental condition for offering coverage is that rates need to reflect the risk exposure we are insuring. Fortunately, through constructive discussions with the CDI, we are now ready to take this step back into the market,” stated Coleman.

Farmers said it plans to resume accepting new business commercial multi-peril applications as of Aug. 1.

Farmers last year also began limiting new homeowners insurance policies in California along with pullbacks from several other insurers.

Home insurance rates are on the rise in California, and availability has also become a concern, as many insurers are pulling back from the wildfire prone state. Proposed solutions to the crisis have included finding ways to expedite rate filings, enabling insurers to use reinsurance rates in filings, as well as enabling them to use catastrophe modeling to set rates.

Many of these proposals indicate a growing interest in making a change to Proposition 103, the 1988 voter-approved law that requires prior approval from the California Department of Insurance before implementing property/casualty insurance rates.

The calls to make changes to Prop. 103 have grown louder as insurers pull back from writing homeowners insurance in the state.

Last May, State Farm announced it had stopped accepting new policy applications for property/casualty insurance in California due to increased risks from wildfires and inflation. Last month, State Farm said it would non-renew 30,000 California homeowners, rental dwelling, and other property insurance policies.

The Hartford announced in January it would discontinue writing new homeowners policies in California. Liberty Mutual in July 2023 stopped offering its business owner’s policy product in the wildfire-prone state and that same month Farmers began limiting new homeowners insurance policies in California.

All of this pressure seems to have pushed even the state’s top regulators into action. In addition to the work the CDI has done, California Gov. Gavin Newsom last week during a press conference on the state’s budget mentioned he was working to try and expedite the insurance rate filing process. The move was applauded by insurers.

The American Property Casualty Insurance Association, which has been calling for changes to Prop. 103 for years, applauded Newsom’s comments.

“We appreciate the Governor highlighting this critical issue,” stated Denni Ritter, APCIA department vice president for state government relations. “Expediting the rate review process is a vital component to addressing California’s insurance crisis. We look forward to working with the Administration, Legislature and Department of Insurance on this crucial reform and other reforms necessary to fix our broken regulatory system and increase the availability of insurance for California homeowners, drivers, and businesses.”