Travelers' Insurance Struggles Amid California Wildfires and Regulatory Hurdles

Travelers' profit dropped 60% in the first quarter due to record losses from the Los Angeles wildfires, highlighting the severe impact of natural disasters. The insurance industry faces challenges from frequent extreme weather events and regulatory constraints that limit risk-based pricing adjustments.

Travelers' profit plunged by 60% in the first quarter, largely due to significant exposure to the devastating Los Angeles wildfires. The catastrophe resulted in a record loss of over $2 billion, marking a severe impact from one of California's costliest disasters, estimated to cause $250 billion in economic damage.

In recent years, insurers like Travelers have contended with increased natural disasters, prompting efforts to minimize exposure in high-risk areas. However, events such as the California blaze continue to inflict substantial damage despite these precautions.

The company's catastrophe-related losses netted $2.27 billion, a sharp rise from $712 million last year, while core profits dropped to $443 million from $1.1 billion. Despite these challenges, CEO Alan Schnitzer expressed satisfaction with the quarterly profits, amidst criticisms of California's stringent pricing regulations which restrict pricing flexibility, compelling insurers to exit the market, reducing competition and consumer choices.

(With inputs from agencies.)