Farmers Insurance eliminated the cap on the number of homeowners insurance policies it offers in California, marking a significant step for a state that has been working to stabilize and rebuild its private insurance market for years.
The insurance company announced last week that it removed its previous cap of 9,500 new policies per month due to expectations that there will be an improved homeowners insurance market in the state under Commissioner Ricardo Lara’s Sustainable Insurance Strategy. Farmers first implemented a cap of 7,000 new home-insurance policies per month in 2023 before raising the cap in 2024.
The cap was originally implemented due to the deteriorating insurance climate in California forced other insurers to limit business. Allstate abruptly stopped selling new homeowners’ insurance policies in November 2022, followed by State Farm, which stopped issuing new homeowners and many property insurance policies in 2023.
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Wildfire risk, home-rebuilding costs, and reinsurance costs rose much faster than insurers were allowed to raise prices, creating a bad environment for insurers to operate. Insurance companies in the state need approval from the California Department of Insurance before raising homeowners-insurance rates. However, residents paid the price, facing a host of issues from steep premium increases and limited coverage options. Meanwhile, millions of residents experienced growing fear and uncertainty about maintaining coverage.
Behram Dinshaw, Farmers Insurance president of personal lines, said the insurance company’s Sustainable Insurance Strategy-inspired rating plan is designed to expand its offerings to more homeowners across California. This includes Farmers Smart Plan Home, Farmers Smart Plan Condominium and Farmers Smart Plan Renters policies.
“By removing the cap on offering new homeowners policies, Farmers is doubling down on its commitment to California homeowners, expanding choice and availability for consumers across the state,” Dinshaw said.
The company also submitted a Sustainable Insurance Strategy-inspired rating plan that Dinshaw said “is designed to expand our offerings to more homeowners across California.”
That plan includes bringing, at minimum, thousands of new insurance policies to areas where people struggle to get insurance otherwise known in the industry as “distressed” locations.
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Starting in early 2026, Farmers will market directly to about 300,000 people in those distressed areas and give local Farmers agents more tools to help with outreach.
But as part of this plan, the company is simultaneously asking state regulators for permission to raise its rates by an average of 6.99% across California, which would likely lead to higher premiums for most customers.
A rate increase changes the underlying pricing formula insurers use and typically leads to higher premiums, which is what customers pay.
However, the company also wants to increase the discount for customers who bundle home and auto policies from 15% up to 22%.
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Farmers says it remains dedicated to helping “maintain an open and viable insurance marketplace by continuing to offer new homeowners insurance policies in the state without stoppage.”
The insurance group also resumed accepting new business insurance applications from customers seeking coverage for various industries and reopened various manufactured home offerings from foremost insurance.
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