State Farm plans to non-renew about 30,000 property insurance and 42,000 commercial apartment policies in California, focusing on areas with substantial wildfire or fire following earthquake hazards. The nonrenewals will impact 2% of its total policies in the state, and affected customers will retain coverage until their current contract is up. The decision was made to ensure long-term sustainability due to financial challenges, inflation, catastrophe exposure, and reinsurance costs. The company is working with policymakers to pursue reforms in insurance regulations, including allowing companies to switch to catastrophe modeling for rate calculations.
Homeowners insurance companies are leaving California due to state regulations preventing them from raising rates to reflect inflation and market conditions. State Farm is non-renewing existing policies and getting out of apartment policies entirely, while American National is also withdrawing from the state. The state's "protections" for policyholders affected by wildfires are not effectively addressing the insurance crisis, leading more Californians to rely on the FAIR Plan, an insurer of last resort. The state's bureaucratic hurdles and lack of competition are distorting the marketplace, and despite warnings, the state's leaders have not taken the necessary actions to address the insurance problem.
State Farm General Insurance Company plans to non-renew 72,000 policies in California, including 30,000 property insurance and 42,000 commercial apartment policies, citing the need for long-term sustainability due to financial challenges such as inflation and reinsurance costs. The company's decision to withdraw from the commercial apartment market in California and non-renew certain property insurance policies is a response to the state's insurance regulations and its efforts to establish an environment where insurance rates better align with risk. This move follows State Farm's previous decision to stop accepting new insurance applications for all business and personal property in California, with other companies like Allstate also making similar announcements.
Allstate has stopped issuing new home or property insurance policies in California due to the state's wildfire risk, higher costs for repairing homes, and higher reinsurance premiums. State Farm made a similar announcement last month. California Insurance Commissioner Ricardo Lara submitted new insurance pricing regulations requiring insurance companies to provide discounts to consumers and other certain protections, which insurers say make things more challenging to quickly adjust prices in instances of high inflation.
Allstate has stopped issuing new home or property insurance policies in California due to the high cost of insuring new customers in the state, which is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums. State Farm made a similar announcement last month. California Insurance Commissioner Ricardo Lara submitted new insurance pricing regulations requiring insurance companies to provide discounts to consumers and other certain protections, which insurers say make things more challenging to quickly adjust prices in instances of high inflation.
