Tokio Marine Insurance, Mercury Insurance Agree To Customer Switchover For Thousands Of Policyholders

Thousands of California insurance-holders saw a rare moment of relief on Monday when the Mercury General insurance company announced that they would be working with both the Tokio Marine America Insurance Company and the Trans Pacific Insurance Company, who will be pulling out of the state soon, and offering thousands of their customers new policies once their old ones run out.

For over a year, insurance companies have been slowly limiting policies, ending the allowance of new policies, or generally reducing their presence in the state. In 2022, GEICO closed down all 38 of their offices in the state, with State Farm raising driving insurance rates in March of 2023. However, the largest action came in May 2023 when State Farm Insurance announced that they would no longer be accepting new applications for any kind of insurance other than personal vehicle insurance because of large increases in construction costs and inflation. About a week later, it was revealed that Allstate had done the same thing, stopping all new homeowners insurance policies for the last several months. Later in the year, Farmers announced new limits on the number of new homeowner insurance policies it will give each month, with numerous other insurance companies, such as Liberty Mutual, no longer offering certain policies in the state.

Other major insurance limiting factors soon struck the state as well. In August 2023, Farmer’s announced 2,400 layoffs, with nearly all companies raising rates by at least 20% in late 2023 and early 2024, including State Farm. For the companies, the reasons were simple: large increases in construction and reconstruction costs, a rise in crime, inflation, and a largely increased risk of danger because of more wildfires. In March, State Farm also made the drastic decision to remove 72,000 insurance policies in the state, roughly 2% of their total number in California. Finally, last month, both the Tokio Marine America Insurance Company and the Trans Pacific Insurance Company announces that they would be pulling completely out of California, ending over 10,000 home and umbrella insurance policies.

However, unlike recent insurance pullouts and rate increases, Tokio Marine Holdings, the parent company of both Tokio Marine America Insurance Co. and Trans Pacific Insurance Co., wanted to provide a transitionary insurance process for at least some of their customers. They began working with Mercury insurance soon after and came to something of an agreement.

Mercury-Tokio Agreement

According to Mercury General CEO Gabe Tirador, thousands of Tokio Marine and Trans Pacific customers are to be added to Mercury Insurance in the next few years. The deal, made between Mercury, Tokio Marine, and the California Department of Insurance (CDI), will make sure that agents from both companies are available to help customers transition over.