By Dustin Siggins for PRNews
California’s largest homeowner insurance provider is saying goodbye, citing wildfires, skyrocketing construction costs, and other issues to protect itself from financial losses in the state. State Farm’s decision to no longer take new applications is at least the third similar decision by major insurers in the last year, and comes after the company’s homeowners insurance department lost over four billion dollars in California in 2021.
It’s never easy to announce that your company is leaving a huge market, or that you are making that decision “to improve the company’s financial strength.” State Farm’s communications team deserves credit for limiting brand damage by choosing a simple, straightforward statement that said and did all of the right things.
Here’s what State Farm announced last week:
State Farm General Insurance Company®, State Farm’s provider of homeowners insurance in California, will cease accepting new applications including all business and personal lines property and casualty insurance, effective May 27, 2023. This decision does not impact personal auto insurance. 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.
We take seriously our responsibility to manage risk. We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for their wildfire loss mitigation efforts. We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to improve the company’s financial strength. We will continue to evaluate our approach based on changing market conditions. State Farm® independent contractor agents licensed and authorized in California will continue to serve existing customers for these products and new customers for products not impacted by this decision.
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