Kemper and Subsidiaries Halt Home and Auto Insurance in California

Beginning in 2024, four small insurance companies are set to cease issuing and renewing homeowners, renters, and auto insurance in California. A recent filing with the California Department of Insurance revealed that Kemper Independence Insurance Company, along with subsidiaries Unitrin Direct Property & Casualty Company, Merastar Insurance Company, and Unitrin Auto and Home Insurance Company, will halt new policies starting January 1 and renewals by March 1, 2024.

Kemper Independence, Merastar, and Unitrin Direct Property & Casualty currently participate in California’s home, renters, and condo insurance markets. Meanwhile, Unitrin Auto and Home Insurance Company focuses on private passenger auto insurance. This withdrawal affects around 2,900 auto policies from Unitrin Direct, 24,500 auto policies via Kemper Independence, 9,900 home policies under Unitrin Auto and Home, and thousands of other policies across the subsidiaries. Collectively, these policies constitute approximately 0.39% of California's home insurance market and 0.23% of its auto insurance market.

Despite the cessation, Kemper's general counsel, Christopher T. Longeway, remarked that given the companies’ limited market share, significant availability issues are unlikely to occur. In conjunction with this market exit, Kemper and its subsidiaries are restricted from applying for a new program for three years, as per the California Department of Insurance's regulatory compliance requirements.

Statewide Implications and Market Trends

This move adds to the volatility in California's home insurance sector, where various major insurers are either constraining operations or withdrawing. Notably, State Farm has stopped issuing new policies, while Farmers has capped new policies at 7,000 monthly. The average home insurance cost in California has increased from $972 in 2021 to $1,056 in 2023 for a $200,000 home, though the average home value stands significantly higher at $747,352.

Kemper plans to finalize its California market withdrawal by February 28, 2025. Although the issuance of new and renewal business will cease, Kemper will continue to process claims for ongoing policies. Impacted policyholders will receive non-renewal notifications and can seek alternative coverage via the California Home Insurance Finder, with assistance from their agents.