State Farm blames wildfires and inflation. The California Department of Insurance is blaming…climate change.
As another glorious day dawns in California, another business entity gives up on the state.
For years, California has failed to develop and maintain its water infrastructure. It also allowed eco-activists to impose policies prohibiting brush-clearing. Decisions like these have consequences.
One of the largest insurance agencies in the country will no longer accept applications for home and business insurance in California due to wildfire risks and the cost of rebuilding.
State Farm has ceased new applications, including all business and personal lines property and casualty insurance, starting Saturday, the company announced in a press release.
Existing customers will not be affected, and the company will continue to offer auto insurance in the state, according to the release.
Construction costs in California have also escalated. This is a contributing factor to State Farm’s decision.
“State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market,” the insurance giant said in a statement on Friday.
“It’s necessary to take these actions now to improve the company’s financial strength,” the company added.
According to the Insurance Information Institute, State Farm was the leading company offering home insurance in California.
The decision to forgo coverage went into effect on Saturday. It applies to both personal and business properties. The company said it will continue to serve existing customers, as well as offer personal auto insurance.
The California Department of Insurance is blaming…climate change.
The California Department of Insurance said State Farm’s decision should not affect other companies.
“The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation,” the Department of Insurance said in a statement.
Other big players are pulling out of CA completely. Couple of factors 1) the losses are too big 2) regulation is tough. Insurnace companies are big public market investors. If you’re getting slapped in the markets and getting slapped because of payouts the business gets tough…
— Johal Capital (@johal_capital) May 28, 2023
No worries, though. Those needing insurance can use California’s FAIR plan, a state-run scheme to provide coverage to those who can’t obtain fire insurance from private insurers. Hopefully, all the rain the state recently enjoyed will keep fires to a minimum so the state’s budget deficit doesn’t expand even further.DONATE
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