BY JULIA SHAPERO, 05/27/23 11:04 PM ET
State Farm will no longer offer home and property insurance to new customers in California starting Saturday, the company said in a press release.
The insurance company pointed to “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market” for its decision, making particular note of the risk posed by the state’s frequent wildfires.
“We take seriously our responsibility to manage risk,” State Farm said. “We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for their wildfire loss mitigation efforts.
“However, it’s necessary to take these actions now to improve the company’s financial strength,” it added.
State Farm said that it will continue to serve existing customers in the state and that personal auto insurance would not be impacted.
There were 7,490 wildfires in California in 2022 that burned more than 360,000 acres, which Cal Fire described as a “quiet year.”
The year prior, wildfires burned more than 2.5 million acres in the state.
Copyright 2023 Nexstar Media Inc. All rights reserved.