Largest insurance company in California no longer writing new home policies due to high risk of catastrophic events
05/30/2023 / By Arsenio Toledo
State Farm, the largest home insurance company in the United States, has announced that it will no longer accept new home insurance policy applications in California, claiming that the risk of wildfires and the cost of rebuilding was too high.
Effective May 27, State Farm General Insurance Company no longer accepts new applications, including to all business and personal lines of property and casualty cover, citing “necessary” actions to improve the company’s financial strength. (Related: When an electric vehicle crashes, even in a minor accident, insurance companies junk the entire car because its battery has to be tossed.)
“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,” said the company in a statement. “We take seriously our responsibility to manage risk. We recognize the Governor’s administration, legislators and the California Department of Insurance for their wildfire loss mitigation efforts.”
State Farm’s new policy will not impact the company’s personal auto insurance business in the state. Furthermore, independent contractor agents in California will continue to serve current customers who were already approved for property and casualty insurance with the company before the deadline, meaning they can still make claims for properties that are already covered by State Farm. The company has also stated that it will try to not issue any non-renewals in the meantime.
Inability to deal with wildfires a major economic threat to California
In 2022, there were 7,490 recorded wildfires in California, a drop of 256 from the five-year average of 7,746 fires per year. This has caused many other insurance companies to either stop or limit property insurance coverage in California, citing the ever-increasing amount of regulations and the state government’s inability to control the damage these wildfires cause.
Last year, the American International Group (AIG) notified thousands of customers in California that it was no longer renewing their insurance policies.
“It’s necessary to take these actions now to improve the company’s financial strength,” read AIG’s statement. “We will continue to evaluate our approach based on changing market conditions.”
Other insurance companies like Chubb Limited and Farmers Insurance have also canceled or dropped renewals for thousands of their own customers in the state.
This has made life that much harder for Californians, especially those living in areas vulnerable to wildfires, who are growing increasingly worried about the refusal of massive insurance companies like State Farm to sell new homeowners insurance policies.
“It would be a nightmare because our property tax is already insanely high. So, if we had a policy like some of our neighbors and friends have had, it would be like having a third mortgage,” said Michael Branson, a policyholder who described to CBS News the potential impact of losing his policy.
Branson had a close call in 2020 during the CZU Lightning Complex Fires, which affected over 86,000 hectares in San Mateo and Santa Cruz counties in San Francisco’s South Bay region. His family’s farm was threatened by the wildfire, and Branson’s decision not to evacuate helped him and local firefighters save his family’s homes on the property.
“We knew it would be a nightmare dealing with insurance and the county and that it would be years before we could rebuild,” he said.
State Farm was the largest property and casualty insurer in California in 2021, and its business in the state brought in over $7 billion in premiums and $4 billion in losses last year.
California regulations state that insurance companies that cover property like State Farm may be required to also cover living expenses such as emergency shelter and food, personal property and valuables, damage to property and other buildings or structures on it, the removal of trees, shrubs and debris and water damage not caused by flooding.
The state’s Insurance Department also enacted a new policy last year requiring insurers to provide insurance discounts for homeowners and businesses that take action to reduce fire danger around their properties.
Learn more about the quickly deteriorating state of affairs in California at CaliforniaCollapse.news.
Watch this video from Fox News discussing State Farm’s decision to stop providing new home insurance in California.
This video is from the Red Voice Media channel on Brighteon.com.
More related stories:
California’s homeless construct two-mile-long vehicle encampment in San Francisco’s North Bay region.
The Big One is coming: New study suggests California could be hit by a major earthquake soon.
Rise of remote work and decline of commuters contributing to San Francisco’s “urban doom loop.”
Insurance industry CRUMBLING amid COVID “vaccine” excess deaths and massive investment losses.
Sources include:
Submit a correction >>
Tagged Under:
Bubble, California, california collapse, Collapse, collapsifornia, disaster, economic collapse, economy, finance, financial crash, fire, home insurance, insurance, market crash, money supply, natural disasters, risk, State Farm, State Farm General Insurance, wildfires
This article may contain statements that reflect the opinion of the author
RECENT NEWS & ARTICLES
