Months after announcing it would not issue new homeowners insurance policies in California, State Farm has now said it will not renew coverage for some 72,000 homeowners. State Farm specifically cited the increasing risk of wildfires as a reason it won’t renew the policies on 30,000 houses and 42,000 apartments.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” the company said in a statement. “State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now.”
The California Department of Insurance may launch a formal investigation into the move.
“One of our roles as the insurance regulator is to hold insurance companies accountable for their words and deeds,” Deputy Insurance Commissioner Michael Soller said. “We need to be confident in State Farm’s strategy moving forward to live up to its obligations to its California customers.”