Conversation with Caldwell Insurance: Disasters in California + Insurance Crisis in Tuolumne County (Sonora, CA)

Well, and it’s funny, it seems like we’re in California, right? Every ten years, there’s some kind of disaster that becomes THE disaster. We had earthquakes in the 90s, like you said. We’ve had riots in the past. We had flooding as a major issue in California. We’ve got it all.

And it seems like that has become the big focus in the insurance industry. And clearly, fire is the big focus right now in the state. Are we just on a cyclical wave here? Is it going to improve? What do you see happening in the future?

I mean, do we need to wait for some other terrible disaster to affect another part of the state so that the focus is less on forested areas, or what does the future hold?

Tuolumne County, clearly, we have an insurance crisis going on. The market hasn’t been getting any better. It’s only been getting worse. We step back, and we look at the state … the states being affected as well. On almost a weekly basis now … if not a daily basis … sometimes it seems like there’s another company that’s pulling out not of just out of Tuolumne County, but out of the entire state of California.

The most recent one, and I had printed out an article here, was Kemper Insurance. Not a huge name, but a fairly big player in the homeowner and auto insurance. And the title of this article here was “Insurance Failing: The Most Disruptive Personal Lines Environment that the CEO has ever seen from Kemper Insurance.

And once again, we talked earlier about an insurance company. They need to make a profit, right? At the end of the day, it’s not a non-profit business. So for every dollar that they’re paying out in claims, they need to make sure that they’re taking a dollar in on the premium side. And in this article, it goes in depth here, and they were talking about the loss ratio, which is, once again, the money that’s coming in versus the money that’s going out in claims.

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