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Farmers Insurance affiliate drops 100,000 customers in California

Farmers Insurance affiliate drops 100,000 customers in California
Posted at 7:43 PM, Mar 14, 2024

SAN DIEGO (KGTV) — Chris Cott says he has spent three days searching for answers after getting this letter from his insurance company.

"I still haven't gotten an explanation," Cott said.

The letter states that his auto insurance will expire in May and will not be renewed. The reasoning is that " this insurer no longer offers insurance in California."

"We've lost Blockbuster and a few things, but an insurance company? This is pretty big," Cott said. "Something totally unexpected. I'm not getting any help."

Cott has Farmers Direct Property and Casualty Insurance, also called Farmers Direct. It's an affiliate of Farmers Insurance and insures around 100,000 Californians. A representative tells ABC 10News that the branch is shutting down this year.

"Now it's like starting over," Cott said. "It really is. It's like getting divorced and getting onto a dating app."

Farmers said this closure will increase operational efficiency and manage risk exposure. Industry experts believe it's more than that.

"While selling residential property insurance policies has become almost impossible," said Steve Young, general counsel for Independent Insurance Agents And Brokers of California. "Even automobile insurance policies are extraordinarily difficult."

Steve Young says auto insurance companies are leaving California for a few reasons. Now that the pandemic is behind us, more people are driving, and insurance claims are higher than ever. Companies want to raise policy rates, but California's strict regulations make it difficult to do so promptly.

"Many insurers have not been able to get any rate relief or rate adjustments from the California Department of Insurance," Young said.

A spokesperson for the State Insurance Commissioner says Californians pay less on average for auto insurance than other states. He pointed to 100 other insurance companies that write policies in California. Cott says he's ready for a divorce.

"I would really like to find somebody to replace them and just part ways," Cott said.

Farmers Insurance says Farmers Direct customers should call 1-800-438-6381. Other Farmers Insurance customers should contact their local agent with questions. People experiencing challenges should call the Department of Insurance at 800-927-4357 or visit insurance.ca.gov so we can help.