Mercury Insurance agreed to accept the transfer of California personal lines policies originally written by Tokio Marine Group insurers, the two carriers said in a media statement yesterday, describing a plan that started to take shape in January.

According to Mercury, one of the few carriers that continues to support agent and customers in California, the insurance department’s planned reforms to modernize California insurance regulations, were a factor pointing the Los Angeles-based carrier in the direction of taking on this chunk of new business.

“We believe very strongly in California’s future,” said Gabriel Tirador, chief executive officer and director of Mercury, in the media statement, noting that Mercury’s interest in the transition was based on more than just a new business opportunity. “The steps Commissioner Lara and the California Department of Insurance are taking to modernize the insurance market through the Commissioner’s ‘Sustainable Insurance Strategy‘ will help stabilize the market and create a transparent, sustainable model that will benefit California consumers.”

Tokio Marine America (TMA) and Mercury have closely cooperated to develop a plan to transition customers of TMA and its subsidiary, Trans Pacific Insurance Company (TPIC), to Mercury with assistance from a group of California independent insurance agents, and leadership from the California Department of Insurance, the statement reads.

Tokio Marine America offers personal lines insurance only in California, representing a small percentage of the California personal lines market. Given the small amount of personal lines business and cost of updating its information technology systems, the company announced in April 2023 that it cannot sustainably support personal lines coverages and that it would be exiting the personal lines market.

TMA’s and TPIC’s exit has no impact on any other Tokio Marine Group company. Tokio Marine continues writing commercial coverage in California.

The statement notes that, unlike other carriers previously writing personal lines insurance in California, “Mercury never shut down new business.” TMA began exploring options to help affected customers and agents immediately after deciding to exit, working on the transfer plan at a time when a number of other insurers were either exiting or pausing new business applications in California.

Mercury remains one of the few companies continuing to support independent agents and California consumers, Mercury reported in the statement.

“Tokio Marine America customers are similar to ours in terms of their coverage needs and their insurance agent relationships,” said Brandt Minnich, Mercury’s Vice President and Chief Sales Development Officer.

“Starting in January 2024, we began working with TMA to bring together a cohesive group of independent agents who could facilitate the transfer of their policies to Mercury for those customers who were interested, ensuring continuing coverage.”

Implementation of the planned solution involves a team of existing Mercury independent agents who also represent TMA, as well as more than a dozen TMA agents who have been offered Mercury agent appointments to help facilitate the transition.

Daisuke Ugaeri, CEO of Tokio Marine America stated that “Tokio Marine America remains committed to commercial lines in California—and across the country—and [to] supporting our agents and customers with exceptional service through this transition.”

The news comes less than a month after Bloomberg reported on TMA and TPIC planned exits based on documents filed with CDI.

Sources: Mercury Insurance and Tokio Marine America