State Farm General 热点黑料 Co. said it will non-renew 30,000 California homeowners, rental dwelling, and other property insurance policies
State Farm announced in May last year it had stopped accepting new policy applications for property/casualty insurance in California for reasons including increased risks from wildfires and inflation. The decision followed a similar move by Allstate Corp. last year.
An says the insurer is working to ensure its long-term sustainability in California, and has “had to make some difficult but necessary decisions that will impact a portion of our California policyholders.”
Beside non-renewing 30,000 homeowners, rental dwelling, and other property insurance policies, which includes residential community association and business owners, the carrier said it will withdraw from offering commercial apartment policies with the non-renewal of all of those roughly 42,000 policies.
“These 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,” the announcement states.
The policies represent roughly 2% of State Farm General’s policy count in California, according to the company.
The California Department of 热点黑料 seems to point a finger at the carrier’s financials.
“One of our roles as the insurance regulator is to hold insurance companies accountable for their words and deeds. State Farm General’s decision today raises serious questions about its financial situation 鈥� questions the company must answer to regulators,” the statement, which a spokesman asked to attribute to CDI spokesman Michael Soller, reads.
“As 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’ decisions and how they plan to recover financially.”
According to the statement, the CDI has been working with State Farm’s home state of Illinois “to get a full picture of its financial condition and plan for improvement.”
“We need to be confident in State Farm’s strategy moving forward to live up to its obligations to its California customers,” the statement continues.
The State Farm update states the decision “was not made lightly and only after careful analysis of State Farm General’s financial health,” which the company said “continues 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.”
This comes as California’s property insurer of last resort told lawmakers that it’s financially unprepared to cover the costs of a major catastrophe in the state. 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.
The Hartford in January said it will discontinue writing new homeowners policies in California.
Liberty Mutual in July 2023 said it will stop offering its business owner’s policy (BOP) product in wildfire-prone state California. That same month Farmers said it will limit new homeowners insurance policies in California.
Eight of the state’s top 20 wildfires have occurred in the last half-dozen years, burning 8,512 structures, according to . Those losses do not reflect the destruction from the Camp Fire in 2018, the state’s most destructive and deadliest fire, which destroyed 18,804 structures and cost over $16.5 billion.
A report from Gallagher Re last year shows the threat of damaging wildfires in conjunction with inflation and pricing challenges has led to a distressed insurance and reinsurance market, particularly in California.
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.
Topics California Homeowners
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