1srelluc
Diamond Member
SACRAMENTO, Calif. (AP) — State Farm will discontinue coverage for 72,000 houses and apartments in California starting this summer, the insurance giant said this week, nine months after announcing it would not issue new home policies in the state
The Illinois-based company, California's largest insurer, cited soaring costs, the increasing risk of catastrophes like wildfires and outdated regulations as reasons it won’t renew the policies on 30,000 houses and 42,000 apartments, the Bay Area News Group reported Thursday.
“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 Wednesday.
“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 continued. “It is necessary to take these actions now.”
My guess is that California has regulations which prevent insurance companies from being able to charge rates which would allow them to make a profit or even break even.
I'd rather them pull out than to increase everyone else's insurance who live in low risk areas of the country.
Never fear though. California will either threaten the insurers to stay and force them to cost shift by raising the rates of the insured who live in other states or, if they can't do that then the California state government will set up underpriced insurance, go bankrupt and then get a bailout from Uncle Sugar in Washington.
FL is in deep trouble too in that regard.......There is a reason people used to have fish camp shacks and small cheap 750 sq ft houses on a slab in southern coastal areas. Just clear off the slab and build another.
Back then no sane person would have written a policy on a million dollar beach house that might get razed by a hurricane every 20 years or so. The insurer should be charging $50k a year just to break even without a huge risk pool in less risk prone areas to dilute the risk.