The news follows a report from Verisk, that insured losses from Hurricane Idalia could hit US$4 billion.

According to reports by The San Francisco Standard, USAA is set to implement substantial enhancements to its wildfire safety requirements for all new home insurance policies in California. The precise ramifications of these changes are yet to be fully elucidated.

As of the previous year, USAA stood as the seventh-largest provider of home insurance in the state, according to the Standard’s findings.

Commencing in March of the upcoming year, four subsidiaries under the USAA umbrella will only underwrite new homeowners’ policies for residences garnering a wildfire risk score of 1 on a 32-point scale. It’s important to note that a higher number on this scale correlates with a heightened wildfire risk.

Previously, USAA had varying cutoff scores for different counties, although none of these scores were lower than 12, as indicated by the Standard.

Additionally, two of these four entities—namely, the USAA Casualty Insurance Company and Garrison Property and Casualty Insurance Company—have outlined their intent to solely consider new applications for primary homeowners’ policies when customers are seeking to replace an existing policy, according to the Standard’s report.

This decision by USAA underscores the ongoing challenges and complexities faced by insurers and homeowners in California’s insurance market, particularly in relation to the ever-present threat of wildfires.

In a submission to the California insurance regulatory body, USAA cited the primary reason for its policy adjustments as an “anticipated inadequacy in rates.”

USAA explained in the filing that properties exposed to a Wildfire Score of 2 or higher pose a greater financial risk, rendering them less profitable compared to properties with a Wildfire Score of 1, primarily due to the heightened wildfire peril.

This filing by USAA adds to a series of challenges facing the California insurance market. In the past year, several insurers, including Allstate and State Farm, have opted to cease writing new homeowners’ policies altogether, while Farmers has disclosed its intention to impose limitations on policies issued within the state.

The severity of the situation prompted California legislators to recently communicate with Insurance Commissioner Ricardo Lara, urging decisive actions to address the mounting concerns within the insurance landscape.

Source: The San Francisco Standard