State Farm will cease new home insurance sales in California, citing the increasing risks of wildfires and soaring construction costs.
The insurance company stopped accepting property and casualty insurance applications in both personal and business lines.Â
However, existing auto insurance policies will remain unaffected by this decision.
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The company explained that its subsidiary, State Farm General Insurance Company, made this choice in response to substantial increases in construction costs.
It has surpassed inflation rates, rapidly growing exposure to catastrophic events and the challenging reinsurance market.
Over the past five years, California has experienced an average of more than 7,000 wildfires annually, consuming over 2 million acres, according to data from the governor’s office.
The intensity of these fire seasons is attributed to the climate crisis, as confirmed by scientists and California authorities.
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While State Farm prioritizes its short-term financial goals, the California Department of Insurance emphasizes its commitment to protecting consumers, despite the factors influencing State Farm’s decision being beyond the agency’s control.
Existing State Farm policyholders will not be affected, and no non-renewal notices will be issued due to this development.
State Farm said it would collaborate with the California Department of Insurance and lawmakers to strengthen market capacity within the state.
It said: “However, it’s necessary to take these actions now to improve the company’s financial strength
The insurance group will continue to evaluate market conditions and adjust accordingly.
