(Airdate: 2024-04-05) ABC - KGTV - Thousands More CA Homeowners Losing Insurance
Published Date: 04/05/2024
Another Exit: American National Joins Growing List of Insurers Leaving California
California’s insurance crisis has deepened yet again. On April 5, 2024, ABC 10 News San Diego reported that American National Insurance Company will stop offering homeowners insurance in California — leaving roughly 36,000 policyholders statewide, including 7,000 in San Diego County, scrambling to find new coverage.
The move marks yet another blow to an already fragile market, coming just two weeks after State Farm announced non-renewals for 72,000 policies. It’s the latest example of a trend that’s now reshaping homeownership across the state: the slow unraveling of California’s private insurance safety net.
1. The Announcement: Thousands Losing Coverage Overnight
ABC 10 News investigative reporter Austin Grabish broke the story, confirming that American National had notified the California Department of Insurance about its plan to exit the state’s homeowners insurance market.
The company said it made the decision after years of mounting losses tied to climate disasters, inflation, and rising reinsurance costs.
“American National confirms it’s notified the state about the company’s plan to stop selling homeowners insurance in California,” Grabish reported.
The numbers tell the story:
- 36,000 total policies will be affected statewide.
- 7,000 homeowners in San Diego County alone will lose their coverage.
- The company represents only 0.4% of the state market, but for the affected families, the loss is devastating.
As insurance broker Karl Susman explained in the segment:
“It’s difficult enough today — and it’s only getting more difficult from here.”
2. Why Insurers Are Leaving: The Math No Longer Works
For years, insurers have warned that California’s unique combination of climate risk and regulatory constraints has made it impossible to operate profitably.
American National cited three primary reasons for its withdrawal:
- Severe weather losses from wildfires, floods, and storms
- Inflationary pressures that have dramatically increased the cost of repairs
- Chronic lack of profitability under current state pricing rules
As the company put it, it simply cannot make money selling homeowners insurance in California anymore.
Susman underscored that point during his interview:
“Insurance companies make money by selling insurance. If they’re choosing to not sell insurance, there’s a pretty good reason — and that’s only that they cannot make money doing it.”
3. The Ripple Effect: A Shrinking Market and Soaring Premiums
The departure of even a small carrier like American National adds more pressure to an already overburdened system.
Susman noted that over 100 companies have now left California in the last few years, either by withdrawing entirely or severely limiting new business.
The few that remain are charging staggering premiums — especially for properties in wildfire-prone areas.
“I’ve seen premiums for $40,000, $50,000, even $60,000,” Susman said.
The result is a market where supply has collapsed, competition is nonexistent, and consumers have little choice but to pay whatever limited options remain.
4. A Crisis of Availability, Not Just Affordability
While much of the public conversation has focused on skyrocketing rates, the bigger crisis may be access itself.
In many California ZIP codes, especially in rural or hillside areas, there are now no private insurers left willing to write new business.
That leaves homeowners with one option: the California FAIR Plan, the state’s “insurer of last resort.”
“Homeowners who can’t find an insurance company to sell them a policy can turn to the California FAIR Plan,” Grabish explained. “It’s an expensive option meant to be a last resort, but now it’s becoming a go-to for many desperate homeowners.”
5. What the FAIR Plan Really Covers — and What It Doesn’t
Susman offered a blunt warning about the FAIR Plan’s limitations.
“Now it’s basic hazard insurance only — which means fire. That’s all,” he said. “There’s no liability. There’s no damage for water, which we’ve seen quite a bit of recently.”
That distinction is critical. The FAIR Plan does not cover water damage, theft, or personal liability — protections that come standard in traditional homeowners policies.
To obtain full coverage, homeowners must purchase a “Difference in Conditions” (DIC) policy on top of their FAIR Plan coverage — often doubling or tripling their total premium.
The result: many Californians are now paying more money for less protection than they had just a few years ago.
6. The Compounding Crisis: Inflation and Rebuilding Costs
Even for those who still have coverage, claims costs have surged due to post-pandemic inflation and labor shortages.
A home that might have cost $400,000 to rebuild in 2018 could now cost $600,000 or more due to higher prices for lumber, steel, and skilled construction workers.
Insurers must pay those higher claims costs — but under California’s current rules, they’re not always allowed to adjust premiums quickly enough to keep up.
That mismatch between rapidly rising losses and slow regulatory response has made long-term solvency nearly impossible.
As one industry analyst put it: “California is the only state where you can lose money faster by being successful.”
7. A Pattern of Exits: From State Farm to American National
American National’s withdrawal is part of a now-familiar pattern.
- May 2023: State Farm halts new homeowner policies in California.
- July 2023: Allstate confirms it also stopped writing new business months earlier.
- March 2024: State Farm announces 72,000 non-renewals.
- April 2024: American National follows suit, cutting 36,000 more.
At this point, nearly every major insurer in California has scaled back operations in some way — either by pausing new business, limiting renewals, or exiting high-risk areas altogether.
And as smaller carriers leave, the FAIR Plan’s exposure continues to balloon — now covering over 300,000 homes, a record high.
8. The Human Toll: Uncertainty for Thousands
For the 7,000 San Diego County homeowners affected by American National’s exit, the challenge is immediate.
Finding replacement coverage can take weeks, and in many cases, the only available option is the FAIR Plan.
Susman warned that the situation is volatile:
“The market is very, very tight. Something that you might be able to find today literally may not be available tomorrow or the next day.”
That volatility is creating a crisis of timing — where even a few days’ delay in shopping for coverage can mean losing access entirely.
9. The Bigger Picture: A Market in Transition
Behind the headlines, California is engaged in a historic overhaul of its insurance system.
Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, announced in late 2023, aims to modernize rate-setting by allowing insurers to:
- Use forward-looking catastrophe models
- Factor in reinsurance costs
- Get faster rate approvals from regulators
The goal: restore stability and bring carriers back to the market.
But as Susman and others have noted, implementation will take time — likely 12 to 18 months before most consumers see relief.
10. What Homeowners Should Do Right Now
For Californians caught in this transition, a few practical steps can help minimize disruption:
✅ Start early.
Don’t wait for your non-renewal notice to take effect. Begin searching for replacement coverage immediately — even if it means applying months ahead.
✅ Work with independent brokers.
Captive agents represent only one carrier. Independent brokers can access multiple markets and surplus-line options.
✅ Know what your FAIR Plan policy covers.
Remember: it’s fire-only coverage. Add a DIC policy for full protection.
✅ Document home improvements.
Fire-hardening measures, new roofing, and defensible space can help you qualify for better rates when insurers re-enter the market.
✅ Stay informed.
Monitor updates from the California Department of Insurance (insurance.ca.gov) for consumer alerts and FAIR Plan changes.
11. The Road Ahead: A Cautious Optimism
Despite the steady drumbeat of bad news, Susman remains cautiously optimistic.
“What’s happening now is painful, but necessary,” he has said in previous interviews. “It’s a market correction — and once insurers can price risk accurately again, they’ll come back.”
California’s insurance crisis is both a cautionary tale and a turning point. The combination of climate-driven risk and outdated regulation has brought the system to the edge of collapse — but it’s also forcing long-overdue modernization.
If reforms succeed, the state could eventually emerge with a more resilient, transparent, and sustainable insurance market — one capable of weathering the next generation of wildfires, floods, and storms.
Until then, homeowners are left navigating a turbulent landscape where the only constant is uncertainty — and where acting early, staying informed, and seeking expert guidance are more important than ever.
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