State Farm has made the decision to cease providing home insurance to new customers in California due to escalating concerns regarding wildfires
The company stated that policy changes were motivated by two key factors: significant rises in construction costs throughout history and a swiftly expanding exposure to catastrophes.
State Farm General Insurance Company has announced that it will cease offering home insurance to new customers in California. The decision comes in response to significant construction cost escalations and a notable rise in catastrophic events, leading to an increased exposure to risks.
Effective this Saturday, the company will no longer accept new applications for various property and casualty insurance types, encompassing both personal and business lines, as stated in their press release.
The company cited several factors for the policy change, including significant rises in construction costs that surpass inflation rates, a notable increase in exposure to catastrophic events, and a difficult reinsurance market.
This decision follows a series of wildfires that occurred in the state the previous year. According to an article by CalMatters published on December 1, 2022, there were 7,490 fires recorded in 2022, which represents a decrease of 256 fires compared to the five-year average of 7,746.
State Farm expressed its appreciation to government officials and the California Department of Insurance (CDI) for their efforts in mitigating wildfire losses. The company emphasized its commitment to effectively managing risk and acknowledged the importance of collaborating with the CDI and policymakers to enhance market capacity in California. However, State Farm emphasized that immediate actions are necessary to enhance the company’s financial strength.
The company assured that it will continuously assess its approach in response to evolving market conditions.
