Regardless of what State Farm says publicly (which they have to be very, very, careful about), there are only TWO possible reasons they are leaving, one neither has to do directly with ‘construction costs’:
1. They simply don’t know how to price their policies, given the whims of politicians in that state.
2. They are NOT PERMITTED to price their policies to cover the cost of doing business.
I suspect that the reason that they’re not dropping everyone is that there is some law in California that still leaves them on the hook for people they drop without cause, making it cheaper for them to run out the clock with existing customers.
I think it would be difficult to underwrite and calculate loss exposure in a State where:
1.). The state courts are whimsical and capricious about insurance laws and penalize the carrier.
2,). Where state laws change on utilities protecting their easements causing ever increasing risk and promoting utilities to allow potential problems that will spread.
3.) Where the state keeps water supply for fire fighting low.
4.) Where the state institutes policies forever driving up construction and replacement costs in a manner that cannot be reasonably forecast.
Why not sell policies elsewhere?