GEICO closes Vacaville office, others around California
A GEICO office in Vacaville is one of several dozen that closed across California earlier this month as the insurance company transitions to online sales and customer support in the Golden States.
This week, trade publication P&C Specialist reported GEICO had closed 38 brick-and-mortar sales and support offices in California, resulting in the layoffs of hundreds of workers.
In a statement, a spokesperson for GEICO said it would continue selling insurance in California and that its current policyholders should not be impacted. GEICO says it has nearly 2.2 million insurance customers in California.
Prospective customers will have to sign up for an insurance policy via the Geico website or its smartphone app. Current customers can manage their policies through either means or via telephone support.
Janet Ruiz, a spokesperson for the not-for-profit trade group Insurance Information Institute, told the San Francisco Chronicle newspaper that a move like the one GEICO took this month is usually intended to help an insurance company balance their risk exposure.
"You take in a certain amount of premiums, and pay out a certain amount of losses," she said. In California, state regulators have "artificially kept rates lower than maybe they should," Ruiz argued, noting that supply chain issues, inflation and California's increased wildfire risks typically justify higher rates for policies here.
Watchdog groups say the amount of motorists in California make the Golden State too lucrative for insurance companies to withdraw completely, but that companies may move to stop offering some types of insurance policies because of higher wildfire risks and other factors.
Indeed, wildfires in the state have burned longer and more-dangerous in recent years, fueled largely by climate change, issues with certain for-profit electrical system and poor vegetation management practices.
In 2020, insurance companies dropped around 212,000 California homeowners over adjusted wildfire risk assessments, and thousands of homeowners were unable to find another insurance company willing to sell them a policy, according to a report by POLITICO.
The issue prompted California Insurance Commissioner Ricardo Lara to order the insurance placement facility FAIR Plan to offer increased coverage options for homeowners who live in high wildfire threat areas. The FAIR Plan, which was established nearly 50 years ago, offers temporary insurance coverage to homeowners who are unable to find insurance in the marketplace.
"With insurance companies increasingly dropping their customers due to
wildfire risk, homeowners depend on the FAIR Plan as the insurer of last
resort for their coverage," Lara said in a statement last year.