State Farm Insurance to non-renew 72,000 policies in California
LOS ANGELES - State Farm Insurance is dropping thousands of California policies beginning this summer, nearly a year after announcing it would no longer accept homeowner insurance applications in the Golden State.
In a statement Wednesday, California's largest home insurer said it would not renew about 30,000 homeowner, rental and other property insurance policies beginning July 3. Additionally, approximately 42,000 commercial apartment policies will not be renewed starting Aug. 20.
The insurance giant said the non-renewals - about 2% of its entire policy base in California - will occur on a rolling basis once existing policies expire, and affected policyholders will be notified of State Farm's decision "in advance of their policy expiration to provide information on other coverage options."
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"This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs and the limitations of working within decades-old insurance regulations," the company said. "State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now."
This latest announcement comes nearly a year after State Farm said it would no longer accept homeowner insurance applications in California, citing cost concerns and "rapidly growing catastrophe exposure."
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Since then, other insurance companies have followed suit. Farmers Insurance announced two months later it would cap its homeowner coverage policies each month and Allstate also said it would stop authorizing new homeowner policies.
A report by the Insurance Information Institute details factors that may be contributing to challenges in California's insurance market, including wildfires, new flood risks, and the state's policies that guide how it assesses pricing and risk.