Allstate and State Farm Say Currently Insured Homeowners Will Not Be Affected
After State Farm announced a pause on new business and personal lines property and casualty insurance in California on May 27, Allstate announced today publicly that they stopped writing new such policies for California late last year.
State Farm’s statement said, “State Farm General Insurance Company®, State Farm’s provider of homeowners insurance in California, will cease accepting new applications, including all business and personal lines property and casualty insurance, effective May 27, 2023. This decision does not impact personal auto insurance. 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.
We take seriously our responsibility to manage risk. We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for their wildfire loss mitigation efforts. We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to improve the company’s financial strength. We will continue to evaluate our approach based on changing market conditions. State Farm® independent contractor agents licensed and authorized in California will continue to serve existing customers for these products and new customers for products not impacted by this decision.”
Other than a statement sent to KTLA, Allstate has not specified why they paused new insurance policies. The statement was quoted by KTLA News and said, “We paused new homeowners, condo, and commercial insurance policies in California last year so we can continue to protect current customers. The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums.”
According to The Wall Street Journal, two other insurance companies, Chubb and American International Group (AIG), have stopped renewing the policies of current customers since 2022. Of course, there are many insurance companies that are still doing business in California, and you can go to the state of California’s insurance commissioner’s website to find them. What longterm effects these policy changes from major insurance companies will have in the state are not yet clear.