Travelers Insurance Announces Home Insurance Rates Going Up 15% In June

According to a new Department of Insurance filing released on Monday, Travelers Insurance is to increase most policies in the state of California by 15.3% starting in June.

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.

Through all this, Travelers, the sixth largest insurance company in the state, has also slowly let go of thousands of policies. Following a switch to a different kind of coverage system, Quantum Home 2.0 in 2018, each year brought fewer policies in the state. In 2022, over 5,000 policies were dropped by the company. Last year, nearly 1,500 policies were dropped.

15.3% rise

This led to the revelation on Monday by the Department of Insurance that, starting next month, all policies covered under Quantum 2.0 will be raised by 15.3%. While Travelers did not state officially why the policies were being dropped, like with other insurances did earlier this year when they announced their own rate increases, the filing did hint that wildfire risks were a part of it. Specifically, they noted that policies dropped in the past had been because they were the ones facing the most extreme wildfire risk.

“The consecutive years of wildfire losses and increasing number of acres burned across the state have challenged our view of risk and require us to implement adjustments to allow us to be viable in the market,” said the filing. “In addition, it is critical to the success of our business that we reduce our exposure to wildfire catastrophic losses, and as such we are in the process of non-renewing ineligible homeowner and landlord policies.”

Trevor Connery, a lobbyist who has worked for insurance companies in the past, told the Globe on Monday that “Travelers is doing what the rest are doing. Risks and costs are going up, so they’re sliding them up too. And they’re only putting up costs by 15.%, which is less than what the others are doing.

“For homeowners in California, as well as condo owners, this isn’t great news, but all the insurance companies are doing this now. Pretty much everywhere too. But California is the most notable because of the flood and wildfire risks that have occurred in the past decade. I’d say for all home insurance policy owners, you know, stay with it and keep insurance. It’s very much needed in this state.”

More insurance cost rises and dropping of high risk policies are expected from other companies soon.