“We take seriously our responsibility to manage risk. We recognize the governor’s administration, legislators, and the CDI (California Department of Insurance) for their wildfire loss mitigation efforts. We pledge to work constructively with the CDI and policymakers to help build market capacity in California,” the company stated in a release. (Credit: Diego M. Radzinschi/ALM)State Farm General Insurance Company, the home insurance arm for State Farm in California, is no longer accepting new applications including “all business and personal lines property and casualty insurance,” the company reported. The change took effect May 27, 2023, and does not affect personal auto insurance.
Growing construction costs, which are outpacing general inflation, increasing catastrophe exposure and a difficult reinsurance market were the impetus for the move, according to the company.
“We take seriously our responsibility to manage risk. We recognize the governor’s administration, legislators, and the CDI (California Department of Insurance) for their wildfire loss mitigation efforts. We pledge to work constructively with the CDI and policymakers to help build market capacity in California,” the company stated in a release.
State Farm independent agents licensed and authorized to conduct business in California will serve existing customers of the impacted lines as well as policyholders for unaffected lines.
“The reality is inflation has increased the cost of every aspect involved in a homeowners insurance claim. It is costing more and taking longer to rebuild homes after a covered loss,” Mark Sektnan, American Property Casualty Insurance Association vice president for state government relations, said in a release. “The California Department of Insurance is working with insurers toward achieving adequate rates and making other market improvements because the admitted market continues to struggle with inadequate rates that don’t cover the increased risks caused by climate change and the growing number of communities in wildfire-prone areas.”
Sektnan said that insurers need greater stability and regulatory flexibility to manage current market conditions. This includes allowing insurers to charge rates that reflect the growing risk of loss and allowing reinsurance costs to be included in rates.
In 2022, State Farm was the largest home insurer in the U.S. with a market share of 18.35% and more than $24 billion in direct premiums written, according to data from the National Association of Insurance Commissioners. The slideshow below offers more details on the leading U.S. home insurance company based on 2022 market share.
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