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April 18, 2024
California Homeowners Insurance Crisis: Thousands to Lose Coverage as Two More Insurers Withdraw
In filings with the California Department of Insurance, Tokio Marine America Insurance Company and Trans Pacific Insurance Company said they would both withdraw from the homeowners and personal umbrella insurance markets in California. Both are subsidiaries of Tokio Marine Holdings Inc., a Japanese company.
The two companies together insured 12,556 homeowner policies in California with $11.3 million in premiums, according to their filings. Tokio Marine also insured 2,732 personal umbrella policies for liability worth $400,000.Tokio Marine America and Trans Pacific join a roster of insurers big and small that have limited and stopped doing business in California, often citing the risk of wildfires in the state. Some, such as AllState and State Farm, have stopped writing new policies in the state though they continue to renew policies — though last month, State Farm also announced it would not renew 30,000 homeowner policies, a small fraction of its total business in California. Farmers Direct Insurance has chosen to leave the state.
In response, California Insurance Commissioner Ricardo Lara has proposed a slate of reforms known as the Sustainable Insurance Strategy, designed to attract insurers back to the state. They include ideas such as changing the process for requesting rate hikes to allowing insurers to use forward-looking risk models when raising their rates. All of the strategy’s reforms are set to take effect at the end of the year.
Tokio Marine did not immediately respond to a request for comment. Neither company disclosed in state filings the reasons behind the withdrawal or where their policies are located in the state.The companies will begin sending non-renewal notices to customers starting July 1, according to state filings.
April 18, 2024
Home Sales in March Had Biggest Decline in 16 Months
Sales of previously owned homes decreased 4.3% from the prior month to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors said Thursday. It was the biggest percentage decline on a monthly basis since November 2022, NAR said.
After sales tumbled to their lowest level in nearly 30 years in 2023, activity picked up to start this year. Home sales rose during the first two months as buyers took advantage of a decline in rates and active listings that ticked higher early in the year.But mortgage rates rose again in February. That sent buyers to the sidelines and it now threatens to squash momentum during the crucial spring home-buying season, which is typically the busiest time of year in the housing market.
The average rate on a 30-year fixed mortgage has moved back toward 7%, according to Freddie Mac. While many economists expect rates to decline later this year, stronger-than-expected inflation data last week could prompt Federal Reserve officials to hold rates at their current level for longer. That could also keep mortgage rates from declining.
Home buyers are also confused about coming changes to rules about how real-estate agents get paid, and whether those changes could increase or decrease their costs. That is causing some home shoppers and sellers to pause until there is more clarity when the new rules go into effect in July.
“There’s so many mixed signals now in the market that for many people, it’s just too much,” said Selma Hepp, chief economist at CoreLogic. “I think they’re just sitting it out.”
While higher mortgage rates make home purchases more expensive for many buyers, a persistently low supply of homes for sale is also pushing prices higher.
The national median existing-home price rose 4.8% in March from a year earlier to $393,500, NAR said.“Home sales are essentially stuck,” said Lawrence Yun, NAR’s chief economist. “We need more inventory, definitely.”
On an annual basis, existing home sales fell 3.7% in March. These sales make up most of the housing market.
Economists surveyed by The Wall Street Journal estimated sales of previously owned homes fell a seasonally adjusted 4.8% in March from February.
Homes typically go under contract a month or two before the contracts close, so the March data largely reflect purchase decisions made in February and January.
For some who bought in March, they found less competition. David Bramlett and Alexandra Hodson started house hunting last fall but decided to wait. When they re-entered the market this year, interest rates had declined, Bramlett said. The couple bought a four-bedroom home with a yard in Cumming, Ga., in March for $480,000.“There was no bidding war,” Bramlett said. “It was good to get in when we did, where we did, with a motivated seller.”
But affordability has worsened in recent weeks. The median monthly payment for a home purchase rose to $2,747 in the four weeks ended April 7, up 11% from a year earlier, according to real-estate brokerage Redfin.
“March and April slowed down tremendously,” said Clint Jordan, a real-estate agent in Colorado Springs, Colo. “Rates are a little bit higher, so a lot of our buyers are sitting back.”
The share of first-time buyers in the market was 32% in March, up from 28% a year earlier. About 28% of March existing-home sales were purchased in cash, up from 27% in the same month a year ago, NAR said.
The typical home sold in March was on the market for 33 days, up from 29 days a year earlier, NAR said.
Nationally, there were 1.11 million homes for sale or under contract at the end of March, up 4.7% from February and up 14.4% from March 2023, NAR said. At the current sales pace, there was a 3.2-month supply of homes on the market at the end of March.
Despite the increase in inventory, the supply of homes for sale in March was still 37.9% below typical prepandemic levels, according to Realtor.com.
But some markets are more amply supplied. In San Antonio, inventory in March was 27% above prepandemic levels.
“It is a buyer’s market now,” said Maricela Mares Castillo, a real-estate agent in San Antonio. “They don’t have to settle as much as they may have last year.”
April 18, 2024
Travelers President: Improvements in Florida Not Enough to Reopen Homeowners
Travelers Cos. Inc.’s first-quarter net income increased 15% to $1.12 billion despite higher catastrophe losses, largely on elevated activity in Central and Eastern states, Schnitzer said.
Renewal premium change was 16.6% in personal automobile and 13.4% in homeowners and other business, he said. That was basically flat, compared with the fourth quarter for auto, but down from 21.2% in homeowners in the prior quarter. Because Travelers writes mostly 12-month auto policies, Klein pointed out a rate hike enacted in May 2023 is still taking effect on policies renewing this month. Personal auto renewal premiums change should moderate as the year progresses, he said. However, in homeowners the carrier plans to keep raising rates “in response to increased loss costs.” Renewals declined because Travelers took “dramatic increases in property Coverage A limits” in 2022 and 2023 and has caught up with higher values and construction costs. “What you’re looking at now is mostly our outlook for rate” increases for homeowners, said Klein. In terms of non-rate actions, he said the carrier, like others in the industry, is executing broad changes. First, it determines eligibility after evaluating exposure and roof age, he said, and may place underwriting restrictions based on roof conditions or tree overhang. "Our primary approach on risk sharing is really to focus on all other perils and wind-hail-tornado deductibles," said Klein. Travelers has implemented higher tornado and wind-hail deductibles in 21 states, "virtually every severe convective storm-exposed state across the country." "We've increased deductibles to help deal with the exposure, and then managing distribution" and appetite to address aggregated exposure locally and at the state level, Klein said.Travelers completed its $435 million acquisition of cyber insurance managing general underwriter Corvus Insurance Holdings Inc. at the start of the year (BestWire, Jan 3, 2024).
Bond and Specialty President Jeff Klenk said the company feels "really good about bringing in and leveraging the capabilities of both organizations. We feel really good about the quality, the profitability of the Corvus book of business. It's consistent and we're taking some of those capabilities." Travelers has scanned its business using proprietary technology acquired with Corvus. "We're really comfortable with what we're seeing," said Klenk. Most operating entities of Travelers Cos. Inc. currently have a Best’s Financial Strength Rating of A++ (Superior).April 18, 2024
New Study Calculates Climate Change’s Economic Bite Will Hit Nearly $38 Trillion Annually by 2049
April 18, 2024
Supreme Court Makes It Easier to Sue for Job Discrimination Over Forced Transfers
April 17, 2024
Microcaptives Make Internal Revenue Service 2024 ‘Dirty Dozen’ List of Tax Scams
April 17, 2024
Travelers Kicks Off 2024 with Strong Q1 Reporting Net Income of $1.123B
April 17, 2024
MGM Resorts Sues FTC to Stop Investigation of Casino Hack
April 17, 2024
Florida Insurance Market Full of ‘Low Quality’ Companies, Study Find
Study recommended changes
State lawmakers and regulators have been aware of the risks. After 2022, when the governor and regulators publicly lashed out at Demotech, lawmakers commissioned a $750,000 study to explore alternatives to the company. The study’s authors recommended requiring that insurers be rated by two companies instead of one, and that the state create a program to encourage those insurers to improve their ratings over time. Lawmakers did not publicly discuss the report or take up its recommendations. Florida’s insurance market is stabilizing, and regulators recently approved eight companies to write policies, six of which are rated by Demotech. Some Florida-based insurers are also seeking ratings from another new agency, Kroll Bond Rating Agency, which was approved by Freddie Mac last year. This session, state Rep. Spencer Roach, R-North Fort Myers, introduced a bill that would have required the state to seek independent ratings for insurers. It never received a hearing. He said the new study’s findings are “obvious.” “Nevertheless I am surprised to see it in print,” he said in a text message.April 17, 2024
HDI Global Expands Mid-Market Commercial Lines Presence
April 16, 2024
Average Premium Renewal Rates Remain Up Year Over Year: Ivans
- Commercial Auto: Q1 2024 average premium renewal rate averaged 9.09%, an increase compared to Q4 2023’s average premium renewal rate of 8.79%. The quarter began with the lowest rate change in January, averaging 7.04%, and experienced its highest rate in February, averaging 10.30%.
- BOP: BOP premium renewal rate increased in Q1 2024 with an average of 9.30% versus 9.12% in Q4 2023. The quarter reached its highest premium renewal rate change in February, averaging 9.72% and ended with its lowest rate of 8.84% in March.
- General Liability: First quarter 2024 premium renewal rate experienced a slight increase compared to Q4 2023, averaging 5.89% versus 5.83%. The quarter began with the lowest rate change in January, averaging 5.38%, and reached its highest rate in February, averaging 6.21%.
- Commercial Property: Average premium renewal rate change for Commercial Property experienced an increase during Q1 2024 at 10.52% versus 10.34% in Q4 2023. The quarter began with the lowest rate change in January, averaging 10.30%, and reached its highest rate in February, averaging 10.77%.
- Umbrella: Average premium renewal rate change for Umbrella experienced an increase during Q1 2024 at 6.81% versus 6.39% in Q4 2023. The quarter began with the lowest rate change in January, averaging 6.35%, and ended with its highest rate in March, averaging 7.10%.
- Workers’ Compensation: Workers’ Compensation premium renewal rate change averaged -0.88% in Q1 2024, down from Q4 2023 at -0.64%. The quarter reached its highest premium renewal rate change in February, averaging -0.40% and ended with its lowest rate of -1.57% in March.
April 16, 2024