The company blames 'increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market.'
Insurance giant State Farm is no longer accepting new applications for business or personal property coverage in California.
“We take seriously our responsibility to manage risk,” the company said in a statement posted to its website Friday. “State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market.”The company was the state’s largest provider of property and casualty insurance, the most recent year for which data are available from the California Department of Insurance.
“While insurance companies prioritize their short-term financial goals, the long-term goal of the Department of Insurance is protecting consumers,” said Michael Soller, deputy insurance commissioner and spokesman. “The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry and global inflation.
“Protecting Californians from deadly wildfires means everyone doing their part, including insurance companies, by rewarding consumers for being safer,” Insurance Commissioner Ricardo LaraWhile State Farm pledged to “work constructively” with California policymakers and regulators, the change is necessary to “improve the company’s financial strength,” the statement said.
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