A recent article from CNBC shared that on Friday, May 26, 2023, State Farm General Insurance Company revealed plans to halt new homeowners insurance applications in California.
The company stated that the decision comes as a result of the escalating threats of natural disasters, such as wildfires, an unprecedented surge in construction costs, and a tough reinsurance market.
The company expressed its commitment to managing risks responsibly in a public statement.
Recent announcements from State Farm General Insurance Company inform us that the insurance giant has decided to cease acceptance of new homeowners insurance applications within the state of California. The reasons provided for this move include a notable increase in disaster threats such as wildfires, skyrocketing construction costs, and an unyielding reinsurance market.
In an official statement, the company emphasized the seriousness with which it approaches its obligation to manage risk.
The new policy, which will come into effect from Saturday, does not cover new applications for business, personal lines property, and casualty insurance. Notably, this change does not impact the company's personal auto insurance policies. State Farm's independent contractor agents are also set to continue servicing existing customers.
The insurance company has pledged to collaborate with the California Department of Insurance and other policymakers to enhance the insurance landscape in California. However, State Farm felt the need to take immediate steps to bolster its financial stability amidst the current circumstances.
In light of changing market conditions, State Farm committed to revising its approach as necessary.
The company has not yet responded to CNBC's request for comment.
According to CBS News, as of Friday, June 2, 2023, Allstate has joined State Farm in halting property and casualty coverage to new customers in California, saying "it's too pricey to underwrite policies in the state which has seen thousands of natural disasters in recent years."
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