Posted on 01/16/2025 11:31:43 AM PST by FreedomNotSafety
State Farm General Insurance Company: Update on California Bloomington, IL, March 20, 2024
State Farm General Insurance Company (“State Farm General”) is working to ensure its long-term sustainability in California. In doing so, State Farm General has had to make some difficult but necessary decisions that will impact a portion of our California policyholders as follows:
Non-renew approximately 30,000 homeowners, rental dwelling, and other property insurance policies (residential community association and business owners). (A rental dwelling policy insures rental home owners. Renters insurance is not affected.) Withdraw from offering commercial apartment policies with the non-renewal of all of those approximately 42,000 policies. (A commercial apartment policy insures apartment owners. Renters insurance is not affected.) 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. Combined, these policies represent just over 2% of State Farm General’s policy count in California.
This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which 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.
We also recognize the Insurance Commissioner’s proposed regulatory reforms, such as streamlining the rate application process, accounting for catastrophe modeling and reinsurance costs in rates, and addressing FAIR Plan vulnerabilities. We will continue to work constructively with the California Department of Insurance, the Governor’s Office, and policymakers to actively pursue these reforms in order to establish an environment in which insurance rates are better aligned with risk.
We will notify customers impacted by this decision in advance of their policy expiration to provide information on other coverage options. State Farm independent contractor agents licensed in California will continue to service policies not impacted by these decisions. State Farm General’s May 2023 decision regarding new applications remains unchanged. We will evaluate the need for any additional business actions as market conditions change.
The thieves and crooks are the Cali politicos.
State Farms played “smart business” here. They likely knew of the conditions in and around this area and decided it was not in their best interests to insure houses in a “high risk” area.
They recognized the danger being involved with a business in CA, sensible decision
The folks here were aware of what was eventually going to happen in California. It’s still a shock when it does.
“...not in their best interests to insure houses in a “high risk” area.” High risk is only high risk to an insurance company if they cannot collect premiums sufficient to cover losses. To a point high risk means more premiums and better profits.
I suspect that CA’s FAIR plan did it. That and lack of reinsurance.
The real impact is probably in the future when CA finds there are no new businesses being formed because of the anti-business attitude of the state. Few people I know see any kind of business future in CA.
Agreed.
Given their exposure, the insurance companies should have been well aware of the lack of wildfire mitigation measures that are coming out now after the fact and acted accordingly.
Insurance should not have to cover government malfeasance.
“if they cannot collect premiums sufficient to cover losses.”
Things like wildfires, hurricanes and earthquakes are high-ricsk, long-term risks.
Insuring against them ties up lots of capital for a long-time.
On the other hand, an auto insurer might only need 10% of the capital per premium dollar.
In the future, companies like Blackrock will both own rental housing and insurer it.
When you buy a house in California or coastal Florida, you will have to shop for a windowstorm-insured mortgage.
Florida Coastal Mortgage
20+ mile inland rate = 7.2%
coastal, 2020 building code rate +.7%
coastal, post-Andrew building code rate +1%
coastal, strapped rate, post-Andrew windows +2%
coastal, strapped rate, pre-Andrew windows +3%
unstrapped rates are not offered
I think U-Haul will do fine for a while.
look at the palms on fire:
https://www.theguardian.com/us-news/2025/jan/14/la-california-wildfires-private-firefighters
The burning embers up high get blown the greatest distance.
Hell even Ray Charles saw the fires coming. Years of mis management and playing whack a mole as fires popped up told everyone (except hard core leftests who just refused to accept reality) this was coming.
many of those who will be leaving won’t be packing the ash to take with them.
CA always has many fires, they just got lucky and were able to put some of them out. Their luck ran out. But like the famous saying: Chance (luck) favors the prepared mind (and government).
I hope those insurance companies have hired security for their CEOs. The Hamas-loving, College Loan Deadbeats are all growing out their eyebrows and goatees and calling themselves Luigi.
Good point. Broke the law and scattered my wife’s ashes
off the bridge into the creek.
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