California homeowners’ rates climbed in the fourth quarter of 2018 as insurers reacted to historic levels of wildfire losses, according to data from MarketScout.
Analysts noted that the market appears to be hardening, with rates for homes under $1 million increasing by 3% and by 2% for homes under $1 million.
Additionally, Richard Kerr, Chief Executive Officer (CEO) of MarketScout, said the the company expects to see new entrants into the California market and rate increases from non-admitted insurers of 10% to 50% in the short term.
“The brush and wildfire issues in California are similar to the windstorm issues suffered in Florida 12 to 14 years ago,” said Kerr.
“As more California insurers are deemed insolvent, and others begin to restrict their capacity, the market is hardening,” he continued, adding: “It’s going to be a rough ride until things settle down a bit.”
Personal lines insurers increased rates by an average of 2.25% in Q4, compared to a composite rate increase of 2.5% for the whole of 2018.
This result was influenced by automobile lines, which rose by 2% but were half a percent lower than the previous quarter, and personal articles, which rose by 1.5% and improved by half a percent on Q3.
MarketScout’s analysis of market conditions utilises pricing surveys conducted by the National Alliance for Insurance Education and Research.