State Farm stops new applications for California property insurance, other policies

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By Luis Casiano, Fox News

May 27, 2023 | 3:03 a.m

State Farm General Insurance Company will no longer accept new applications for property insurance and other policies in California, citing “historic” increases in construction costs and inflation,” the company said Friday.

Starting Saturday, the Illinois-based insurance group will stop accepting applications for property, personal lines, and casualty insurance.

This step does not affect personal car insurance.

“The State Farm General Insurance Company made this decision because of historical increases in construction costs that have outpaced inflation, rapidly increasing exposure to disasters, and a difficult reinsurance market,” the company says. he said in a statement. “The insurance department is focused on the safety of our homes and communities.”

The insurer said the measures were necessary to improve its financial strength.

“We take seriously our responsibility to manage risk. “We appreciate the governor’s administration, lawmakers and the California Department of Insurance (CDI) for their efforts to mitigate the massive fire losses,” the company added. “However, it is necessary to take these measures now to improve the company’s financial strength.”

She said State Farm agents in California will continue to serve existing customers.

A spokesperson for the California Department of Insurance told Fox Business that it is committed to protecting customers.

“The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation,” the spokesperson said.

California has some of the most expensive housing costs in the country amid a shortage that many say has exacerbated the homeless crisis across the state.

The state plans to spend about $30 million to build 1,200 tiny homes.

The company said in February it suspended new coverage for some drivers of Kia and Hyundai vehicles in several states because the vehicles were vulnerable to theft.