“California” has become virtually synonymous with “catastrophe,” an endless descent into the abyss as the state creates one problem after another.
Now, insurance companies are leaving California in droves. This is a major economic blow to a state that attempts to maintain a suitable housing market, despite chains of natural disasters and bureaucratic red tape.
Unending Crises Threaten Housing Markets
State Farm officially halted all sales of new home insurance policies to new Californian applicants by May 27, given the burden of rapid inflation rates and wildfires.
State Farm General Insurance Company will no longer be accepting new applications including all business and personal lines of property and casualty insurance in California. https://t.co/26RZkZQM0y
— NEWSMAX (@NEWSMAX) May 28, 2023
Inflation has been a detrimental problem for insurance, with State Farm noting a historic spike in construction costs, in addition to layers of regulations that stifle any potential endeavors.
California’s housing costs rank first in the United States. Home and even auto owners are consistently having to contend with inflation, often underwriting losses while attempting to navigate red tape.
State regulations and the constant looming danger of a wildfire have led many insurance companies to cut back on business owners to avoid financial deficits.
Current policyholders were notified by the company that their plans will not change.
State Farm Losses
In 2022, State Farm amassed over $13.4 billion in underwriting losses pertaining to the increasing severity of auto insurance claims.
REPORT: State Farm stops offering home, property insurance in California; Decision does not impact existing customers.
— Election Wizard 🇺🇸 (@ElectionWiz) May 27, 2023
The company says it takes its relationship with clients very seriously, but external conditions create a problem for finances, given rapid losses of infrastructure require large sums of money at hand.
Further, California’s use of price controls has made selling products within the state difficult, with insurance policies not obtaining their respective financial worth.
Michael Soller, the deputy insurance commissioner for State Farm, said they applaud the effort by the California governor, agencies, and legislators at combatting wildfires.
Soller made it clear the factors which caused State Farm to withdraw from California are beyond the insurance company’s control, citing worldwide inflation and climate change.
