Let’s put this in perspective; Insurance carriers cannot simply raise rates without first going through a lengthy rate increase filing with the CA Dept. of Insurance that is scrutinized at many levels. Even a 50% increase would be unlikely. 300% .. no way. The broker you mention is prepping you for your next renewal when he’ll be screwing you.
The reason why so many of the cedar victims saw rate increases was most likely not due to a rate increase. It was likey because they became properly insured after the fire. Their underinsurance was due to improper disclosure, improper review or an incompetent agent or all of the above.
Calif is still a great risk for insurers and they are not going anywhere, at least not because of a 1 billion dollar event. That is chump change compared to a good Hurricane or Earthquake. Remember, earthquake is not covered under the homeowners policy and can only be purchased through a state sponsored program with huge deductibles. I believe the southeast U.S. still has much higher claim frequency rates, though the severity may be a little less for your average hurricane event. Hurricanes result in a higher number of claims, but the average payout is less (think a lot of new roofs vs. a completely destroyed house) We had a little over 1K homes destroyed and the remainder of the claims were minor to moderate damage only or hotel expense claims for evacuation. The latter two are low dollars claims compared to the total loss ones.
Overall, when you spread the claims across all the carriers doing business in Calif., I’m sure even the largest (State Farm, Farmers, Allstate) are getting no more than 200 total loss claims and the numbers go down from there with the smallest carriers getting maybe 5-10.
Also, keep in mind the reinsurance most of these carriers carry themselves. They will recover a portion of their loss dollars depending on their reinsurance coverage. Major players like General Re (Gen Re) and other international companies will be sharing some of this pain.
