2022 Rate Changes

In September 2021, CEA received approval from the CDI for a slight rate increase of 2.9%, effective April 1, 2022. Although the actual dollar increase will vary from policy to policy, the average annual dollar impact will be an increase in annual premium of:

  • $26 for a homeowners policy,
  • $12 for a condo-unit owners policy,
  • $4 for a mobilehome owners policy, and
  • $1 for a renters policy.

Additionally, if the insured value of your insured’s house has increased on their residential policy, their CEA earthquake insurance premium will also increase to reflect the higher coverage limits.

Because policies renew throughout the year, some policyholders who were affected by the previous rate change starting July 1, 2021, will not see their premium change until the first half of 2022. These policyholders may see the combined effect of both approved rate changes, i.e., the last year of the approved 2018 rate and form filing and the newly approved 2022 rates.

For these policyholders, their premiums may be significantly more than they were previously.

If your insured’s premium changed, it is due to one or more of the following factors:

  • The increase of 2.9%, effective April 1, 2022, to ensure CEA rates remain actuarially sound. This increase applies to all existing CEA policies upon renewal.
  • The final year of a three-year implementation, which was made to reflect a change in the USGS assessment of earthquake hazard which showed increased earthquake risk in certain locations. Increases associated with this change affect about 15% of CEA policies.
  • Increases in the reconstruction cost of their house. Given that reconstruction costs have risen significantly in California in recent years, this will affect most CEA policies.

What Can I Do To Reduce My Insured’s Premium?

  • Choose a higher deductible (up to 25%).
  • Adjust or eliminate the amount of coverage for things like personal property.
  • If they have the standard Homeowners policy, consider advising them to select CEA’s Homeowners Choice policy which allows them to separate their coverages, or just cover the dwelling itself, which will keep the premium cost down.
  • If your policyholder lives in an older home, consider advising them to strengthen their older house that was not built to current seismic building codes to receive a premium discount of up to 25% from CEA—although this does cost money up front, in the long term it makes their house safer and strengthens it against damaging earthquakes.
  • For mobilehome owners, consider recommending they install an earthquake-resistant bracing system (ERBS). Mobilehomes with an approved ERBS qualify for a discount of 21%.
  • Use our Premium Calculator tool to run through the flexible coverage and deductible options, to see how changes in coverage and retrofit discounts can affect your insured’s premium cost.

If none of these options fit their needs, you may wish to consider other insurers that offer earthquake insurance policies. What we care most about is that your insureds are protected against earthquake damage and prepared for the future.

Why Did Cea Raise Rates For 2022?

By state law, CEA is required to establish rates that are actuarially sound, i.e., that we collect enough premium to cover expected costs, thereby maintaining the necessary financial strength to meet our promises to our policyholders.

To have the necessary financial strength to insure all our policyholders, CEA builds claim-paying capacity from many sources, which includes purchasing reinsurance (insurance for insurance companies) and other sources of financial risk transfer.

Due to the exposure growth of CEA (both the number of policyholders and the cost to reconstruct the homes of existing policyholders) over the last few years, CEA has increased the amount of reinsurance it purchases to maintain the necessary financial strength. Additionally, due in part to major catastrophes around the world, the price for each dollar of catastrophe reinsurance purchased has been rising. The combination—needing more reinsurance dollars and increasing prices per dollar—has put upward pressure on CEA rates.

CEA does not receive any state or federal backing (unlike many other government-related natural catastrophe insurance entities); so, we must pass on these cost increases directly to our policyholders in the form of a slight rate increase.


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