Safeco to Stop Selling Calif. Homeowners

Seattle-based Safeco Corp. will stop selling homeowners policies in California in response to Commissioner John Garamendi’s emergency regulation restricting insurers’ use of the CLUE database.

The action, which a Safeco spokesman Paul Hollie described as temporary, became official on July 22.

“We’re looking to work with the commissioner’s office on this,” Hollie told Insurance Journal. “Assuming that there can be some sort of a compromise that could come from working with the commissioner’s office, we’d hope to resume writing business in California. We’ve been there since 1933 so it’s obviously important to us.”

Two Safeco subsidiaries sell about 2.8 percent of California’s homeowners policies, or about $128 million in written premium, according to data from the National Association of Insurance Commissioners. About 19 percent of the property/casualty business Safeco writes in California is homeowners. The company said it covers 240,000 homeowners in the state.

Direct writer State Farm Mutual Insurance Co. stopped issuing new homeowners policies last year, and the Safeco announcement is likely to only worsen an already hardened market bruised by increasing mold litigation and the lingering asbestos problem.

Industry groups are appealing the Garamendi regulation in the courts but a judge refused to stay the regulation in the meantime, meaning insurers must decide now whether they can live with the new limits until the matter is resolved by the courts.

The Comprehensive Loss Underwriting Exchange (CLUE) is a national industry database tracking property’s claims histories and is used by insurers in evaluating risks. Garamendi says the system is unfair because it tracks properties rather than the an individual property owner’s claims history.

Safeco will continue to service current homeowners policyholders.