![](\"https:\/\/www.insurancejournal.com\/app\/uploads\/2017\/12\/Southern-California-Wildfire-580x387.jpg\")
<\/p>\n![](\"https:\/\/www.insurancejournal.com\/app\/uploads\/2017\/12\/Southern-California-Wildfire.jpg\")
<\/div>\nState Farm General Insurance Co. said it will non-renew 30,000 California homeowners, rental dwelling, and other property insurance policies<\/p>\n
State Farm announced in May last year it had stopped accepting new policy applications for property\/casualty insurance<\/a> in California for reasons including increased risks from wildfires and inflation. The decision followed a similar move by Allstate Corp. last year.<\/p>\n An update on State Farm\u2019s website<\/a> says the insurer is working to ensure its long-term sustainability in California, and has \u201chad to make some difficult but necessary decisions that will impact a portion of our California policyholders.\u201d<\/p>\n Beside non-renew 30,000 homeowners, rental dwelling, and other property insurance policies, which includes residential community association and business owners, the varrier said it will withdraw from offering commercial apartment policies with the non-renewal of all of those roughly 42,000 policies.<\/p>\n \u201cThese actions are California-specific and will occur on a rolling basis over the next year, beginning on July 3, 2024, for homeowners, rental dwelling, residential community association and business owners policies and on August 20, 2024, for commercial apartment policies,\u201d the announcement states.<\/p>\n The policies represent roughly 2% of State Farm General\u2019s policy count in California, according to the company.<\/p>\n The California Department of Insurance seems to point a finger at the carrier\u2019s financials.<\/p>\n \u201cOne of our roles as the insurance regulator is to hold insurance companies accountable for their words and deeds. State Farm General\u2019s decision today raises serious questions about its financial situation \u2014 questions the company must answer to regulators,\u201d the statement, which a spokesman asked to attribute to CDI spokesman Michael Soller, reads.<\/p>\n \u201cAs state regulators, we deal with companies that are national and multinational in scale. To be effective for Californians, we join forces with other states so we can understand the basis for insurance companies\u2019 decisions and how they plan to recover financially.\u201d<\/p>\n According to the statement, the CDI has been working with State Farm\u2019s home state of Illinois \u201cto get a full picture of its financial condition and plan for improvement.\u201d<\/p>\n \u201cWe need to be confident in State Farm\u2019s strategy moving forward to live up to its obligations to its California customers,\u201d the statement continues.<\/p>\n The State Farm update states the decision \u201cwas not made lightly and only after careful analysis of State Farm General\u2019s financial health,\u201d which the company said \u201ccontinues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations. 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.\u201d<\/p>\n This comes as California\u2019s property insurer of last resort told lawmakers that it\u2019s financially unprepared to cover the costs of a major catastrophe in the state<\/a>. The plan now faces $311 billion in potential losses, up from $50 billion six years ago, California FAIR Plan president Victoria Roach said in a state legislative hearing.<\/p>\n The Hartford in January said it will discontinue writing new homeowners policies in California.<\/p>\n Liberty Mutual in July 2023 said it will stop offering its business owner\u2019s policy<\/a> (BOP) product in wildfire-prone state California. That same month Farmers said it will limit new homeowners insurance policies<\/a> in California.<\/p>\n Eight of the state\u2019s top 20 wildfires have occurred in the last half-dozen years, burning 8,512 structures, according to the Western Fire Chiefs Association<\/a>. Those losses do not reflect the destruction from the Camp Fire in 2018, the state\u2019s most destructive and deadliest fire, which destroyed 18,804 structures and cost over $16.5 billion.<\/p>\n A report from Gallagher Re last year shows the threat of damaging wildfires in conjunction with inflation and pricing challenges<\/a> has led to a distressed insurance and reinsurance market, particularly in California.<\/p>\n The State Farm update said the company will notify customers impacted by the decision in advance of their policy expiration, and that independent contractor agents licensed in California will continue to service policies not impacted by the decisions.<\/p>\n Topics<\/span> California<\/a> Homeowners<\/a> <\/p>\n<\/p><\/div>\n Was this article valuable?<\/p>\n<\/p><\/div>\n