Wildfire Vulnerability Prompts State Farm To Cease Home Insurance Sales In California

According to a Friday business announcement, State Farm will no longer provide new home insurance policies in California due to the risk of wildfires and rising building expenses.

On May 27, the primary insurer stopped taking applications for all commercial and personal lines of property and liability insurance in California. However, the decision made by State Farm has no impact on current auto insurance.

According to a statement from the firm, “State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly increasing catastrophe exposure, and a challenging reinsurance market.”

In California, over the previous five years, there have been an average of over 7,000 wildfires yearly that have burned an average of over 2 million acres. Authorities and scientists in California attribute the severity of the fire seasons to the climate problem.

According to Michael Soller, a California Department of Insurance spokesman, “Insurance companies prioritize their short-term financial goals, but the Department of Insurance’s long-term goal is protecting consumers.”

Soller stated that the organization has no control over the circumstances influencing State Farm’s decision.

Current State Farm customers are unaffected by this statement, and no non-renewals are being made, Soller emphasized.

With its affiliates, State Farm, the largest provider of auto and home insurance in the US, declared it will continue collaborating with the California Department of Insurance and legislators to expand market capacity in the state.

State Farm added that it would reevaluate based on the state of the market but that these steps must be taken immediately to strengthen the company’s financial position.

With its headquarters in Illinois, the insurance company announced that its agents would keep serving current clients.

According to a Wall Street Journal report, American Insurance Group announced last year that it would stop writing policies for expensive Californian properties due to the risk of wildfires.

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