CSE Insurance is sixth carrier ending California coverage; officials say phaseout was long in works

Another insurance carrier has quietly given notice that it’s going to phase out coverage in California.

Beaverton, Oregon-based CSE Insurance Group sent a message to agents that as of Oct. 9 it would stop quotes for all California policies, according to a copy shared with the North Bay Business Journal. The company also said that as of Oct. 9 it would send out letters to policyholders that automobile coverage wouldn’t be renewed if it expired on or after Nov. 17, with renewals ending for all other policies that expire as of Jan. 1, 2024.

“It was very short notice,” said Elissa Wadleigh, an agent with Sonoma Valley Insurance Agency in Santa Rosa. The message from the insurer’s CEO, Marcus Linden, arrived on Oct. 6, the preceding Friday.

The letter from the insurer said it would help brokerages work with policyholders on alternative coverage. Wadleigh said the brokerage has been proactively calling customers to see what options exist, but it’s coming at a steep price.

“People who are getting (policies) renewed are seeing significant increases (in premiums),” Wadleigh said. “They are lucky to have insurance at all, at this point.”

But the state Department of Insurance said that the move by CSE Insurance Group, called a small player in California’s automobile and property insurance markets, is not an indication that officials’ recently announced efforts to keep the number of insurance options are failing.

"CSE informed the Department last year of plans to leave the market while providing a soft landing for policyholders with a comparable policy,” Michael Soller, department spokesperson, wrote in an email Oct. 13. “We are working on the rate filings that will help transition policyholders with as little disruption as possible.”

The company represented just 0.4% of the state’s homeowner’s insurance market and only 0.2% of the auto market, according to the department. The regulator is working on a rate filings “that will help transition policyholders with as little disruption as possible,” Soller wrote.

State Insurance Commissioner Ricardo Lara announced last month a multipronged plan to retain insurers after the departure or pull-back from the California market of State Farm, Allstate, Farmers, USAA and Kemper in the past four months. However, Kemper’s decision involved its polices nationwide.

Started in San Francisco 73 years ago, CSE was set to be acquired in the middle of last year by Seattle-based Porch Group. The September 2021 deal with CSE’s owner, Covéa Coopérations S.A., was set to provide Porch an entry into the California insurance market. But in August 2022, Porch announced that both companies had terminated the deal, saving Porch $50 million in cash.

“Given the change in the market and the increase in the cost of capital, we are confident there are other ways to deploy the approximately $50 million in cash that would have been used for purchase price and look forward to creating long-term value for Porch Group shareholders,” said Matt Ehrlichman, founder and CEO of Porch Group, in the news release.

Jeff Quackenbush covers wine, construction and real estate. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

Clarification, Oct. 17, 2023: State Farm, Allstate, Farmers, USAA and Kemper have in the past four months have announced their departures or reductions in coverage. A previous version didn’t distinguish that some carriers were still underwriting policies but said they would reduce coverage.