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MattGush/Getty Images November 01, 2022 June Sham is an insurance writer for Bankrate. Before joining the team, she worked for nearly three years as a licensed producer writing auto, property, umbrella and earthquake policies. Maggie Kempken is an insurance editor for Bankrate. She helps manage the creation of insurance content that meets the highest quality standards for accuracy and clarity to help Bankrate readers navigate complex information about home, auto and life insurance. She also focuses on ensuring that Bankrate’s insurance content represents and adheres to the Bankrate brand. Bankrate logo The Bankrate promise
At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation of how we make money. Our content is backed by LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible. All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate logo Insurance Disclosure
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. California might be one of the largest markets for auto insurance in the nation, but a two-year freeze on auto insurance rate filings is spelling trouble for insurance companies and drivers in the state. A return to pre-pandemic levels of driving increased accident severity, and more expensive claims have forced car insurance companies in California into a difficult financial position. Bankrate spoke with Vice President Denni Ritter of the American Property Casualty Association (APCIA) to learn more about the state of the auto insurance industry in California and how it affects drivers in the state. Compare rates and save on auto insurance today! Get quotes Close X RatesRates keep going up in 2022. Compare rates and save on auto insurance today! Get quotes Close X This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Compare auto insurance rates
Answer a few questions to see personalized rates from top carriers. Save on auto insurance with quotes from trusted providers like: Drivers switch & save an average of $750+/year Arrow Right Are you overpaying for auto insurance? Arrow Right Safe drivers choose Allstate Arrow Right Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. See more providers in Choose from insurers in Show More RATE INCREASE ALERT Rates increased up to 12% this year
Shop for a better rate before you renew your current policy. This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Compare auto insurance rates
Answer a few questions to see personalized rates from top carriers. Save on auto insurance with quotes from trusted providers like: Drivers switch & save an average of $750+/year Arrow Right Are you overpaying for auto insurance? Arrow Right Safe drivers choose Allstate Arrow Right Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. See more providers in Choose from insurers in Show More Auto Car Key takeaways California’s Department of Insurance has not approved any auto insurance rate filings since May 2020, despite over 75 percent of companies that sell car insurance in the state filing for a rate increase, according to APCIA. Multiple insurance companies reported loss ratios of over 100 percent in California in 2022, indicating that their claim costs were higher than their incoming premium, according to APCIA. Changes implemented by car insurance companies in California because of their operating and claim losses could make it difficult for drivers to shop for car insurance. When did California s troubles begin
In March 2020, California was the first state to roll out stay-at-home orders in response to the COVID-19 outbreak. It was a decision that shifted driving habits in the state overnight — from UC Davis found an estimated 60 percent drop in traffic volume in April 2020, which resulted in a nearly 50 percent decrease in roadway collisions. Because of this reduction in driving habits, the California Department of Insurance to issue premium refunds to drivers. In total, car insurance companies returned around in premium refunds to California drivers. Pandemic response California halts rate filings
At the beginning of the pandemic, many insurers also withheld or withdrew rate filings that had been submitted to the state’s Department of Insurance for approval. However, as the pandemic evolved and states re-opened, drivers got back on the road. Statistics from the found that the amount of miles driven in 2021 and 2022 were now close to or exceeding miles driven in 2019 and 2020. Still, the Department has maintained its stance. In a statement provided to in November 2021, the Department of Insurance indicated that the pandemic was still ongoing and that driving habits were still decreased. “People returned to pre-pandemic driving levels,” says Ritter, “and some folks developed bad driving habits, like speeding, not wearing seat belts and driving while intoxicated.” Poor driving habits nationwide are commonly cited as a reason for , and it’s certainly true in the Golden State as well. In California specifically, a study from the saw a 10.7 percent increase in traffic fatalities in 2021 compared to 2020. The agency reported that 4,258 people died in vehicle crashes in the state in 2021, compared to 3,847 people in 2020. The APCIA also found that while auto claims with physical damage losses dropped 30 percent in 2020, they increased by 60 percent in 2021. Increased accidents mean more claims, which are also more expensive now due to the pandemic’s effect on supply chain issues and . And a longer repair time also means more expensive rental car costs while the vehicle sits in the shop — found that in May 2021, car rental rates were up 95 percent compared to the beginning of the year. Daily rates in Los Angeles were around $94 per day. What are car insurance companies in California doing now
Car insurance companies in California have started to share the challenges of operating in the state. In recent earnings calls, several major insurers like Allstate, Geico, Kemper and Liberty Mutual reported loss ratios of over 100 percent in California. This means that they paid out more in claims than they received in premiums, and without rate adjustments, it’s difficult for car insurance companies to resolve the imbalance. Normally, car insurance companies can balance their risk exposure, continue to pay out claims and avoid insolvency by being more strict about what new business they take on or filing for rate increases. But these options aren’t currently possible in California. That’s because of a measure passed in 1988. “Proposition 103 turned California into a ‘take-all-comers’ state,” explained Ritter. “This means that if you’re a in the state and you apply for insurance, an insurer has to offer you coverage.” This is even if an insurance company is experiencing losses and continuing to pay out more in claims. Tricia Griffith, CEO of Progressive, said in the firm’s in November 2021, The moratorium on rate increases in California is unfortunate because we don’t think it serves the consumers of California, and you only have a couple of things to do. — Tricia Griffith She went on to note, “There’s a couple of levers that we talked about, and we’ll use those tactics to slow growth, but we want to be a part of the future California market, and we’ll do what we can to get there.” For Progressive, this has meant limiting advertising in the state. Other carriers, like , tried to limit payment plans or prohibited independent agents from selling its personal lines products. Geico has even in California and no longer allows customers to call in for a quote. Instead, prospective clients must start a car insurance quote online. What does this mean for California drivers
While it may seem like a boon for California drivers not to have to face rate increases, there are negative consequences to the situation. The ongoing situation could make it harder than ever for California drivers to shop for car insurance policies and see what options are available to them. And the may be limited on where they can offer coverage to drivers. This could be especially true for those that don’t have access to the internet to shop for policies online and have more complicated needs that require a local insurance agent. Additionally, as one of the most diverse states in the nation, nearly 44 percent of Californians , with 17.4 percent lacking a strong proficiency in English. These drivers could have the most difficult time navigating a phone or online-only process when shopping for car insurance or dealing with car insurance claims, especially if translation services aren’t provided or easily accessible. According to Joseph Lacher, CEO of Kemper Insurance Company, in the company’s auto insurance report, What we’re increasingly seeing is carriers, ourselves included, that are becoming increasingly less willing to write new business, more restrictive from an underwriting perspective, tightening everything they can. — Joseph Lacher The bottom line
What’s happening in California is unlike anywhere else in the country. “The unprecedented losses in the auto insurance market, coupled with no regulatory rate relief on the horizon have caused insurers in California to take the unusual step of trying to limit their exposure to new business,” says Ritter. “This highly competitive industry is no longer competing for new business in the largest market in the country.” Nearly two years after California first implemented shelter-in-place measures to prevent the spread of COVID-19, the landscape of the state has changed for car insurance companies. California drivers may soon face a no-win scenario: either rates need to increase to ensure the financial health of companies, or companies will continue to exit the state, leaving drivers with few choices for coverage. SHARE: June Sham is an insurance writer for Bankrate. Before joining the team, she worked for nearly three years as a licensed producer writing auto, property, umbrella and earthquake policies. Maggie Kempken is an insurance editor for Bankrate. She helps manage the creation of insurance content that meets the highest quality standards for accuracy and clarity to help Bankrate readers navigate complex information about home, auto and life insurance. She also focuses on ensuring that Bankrate’s insurance content represents and adheres to the Bankrate brand. Related Articles