Insurance
Home›Insurance›Industry & Deals›California auto losses worsen for Kemper’s specialty b…
California auto losses worsen for Kemper’s specialty book after SB 1107
Kemper’s underlying loss and LAE ratio rose to 83.8% in the second quarter from 72.5% a year earlier, while Mercury’s combined ratio improved to 89.9% as wildfire reserves supported results.
Two insurers and the same three day earnings window are painting sharply different pictures of California personal auto, highlighting why the question of whether conditions are getting worse depends on which part of the market you look at, Insurance Business reports.
Kemper Corporation disclosed a large second quarter non cash goodwill charge of $460 million that pressured the headline number, but stripping that out the underlying loss and LAE ratio rose to 83.8% from 72.5% a year earlier. Insurance Business says the worsening was driven by rising claim severity and frequency in California, with the details embedded in the carrier’s Q2 earnings round up.
Mercury General, which writes a larger share of its book in California than other public insurers, showed improvement instead. Its second quarter combined ratio fell to 89.9% from 92.5% a year ago, net income rose 58.3% to $263.5 million, and Insurance Business attributes part of the turnaround to wildfire reserves, including $460 million of catastrophe losses tied to the Palisades and Eaton wildfires during the first half of 2025.
The article points to a specific policy change as a likely mechanical driver of the divergence. California’s Protect California Drivers Act, Senate Bill 1107, took effect on January 1, 2025, doubling the minimum bodily injury liability limit from $15,000 to $30,000 per person and tripling the minimum property damage limit from $5,000 to $15,000, potentially increasing payout per claim for policies renewing into the higher minimums. Insurance Business adds that this shift matters more for specialty and nonstandard segments where drivers tend to buy coverage closer to the state minimums.