State Farm and their "Difficult Decision" in California [non-renewals]

[marindependent]

State Farm provides update on California​

Coverager
Mar 20, 2024

The insurer is working to ensure its long-term sustainability in the state, which had led State Farm General to make some “difficult but necessary decisions” that will impact a portion of its California policyholders as follows:

• Non-renew approximately 30,000 homeowners, rental dwelling, and other property insurance policies (residential community association and business owners)
• Withdraw from offering commercial apartment policies with the non-renewal of all of those approximately 42,000 policies

These actions are California-specific and will occur on a rolling basis over the next year, beginning on July 3, 2024, for homeowners, rental dwelling, residential community association and business owners policies and on August 20, 2024, for commercial apartment policies. Combined, these policies represent just over 2% of State Farm General’s policy count in California.

The insurer said that this decision was reached 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.

Coverager Source on State Farm Nonrenewals in California

​

 

[Al3x Lee]

So uhh.. things are going swimmingly in California per usual it seems

 

[marindependent]

and Now from the Insurance Journal:

State Farm Nonrenewing 30K California Homeowners, Renters​

March 20, 2024
State Farm General Insurance Co. said it will non-renew 30,000 California homeowners, rental dwelling, and other property insurance policies

State Farm announced in May last year it had stopped accepting new policy applications for property/casualty insurance in California for reasons including increased risks from wildfires and inflation. The decision followed a similar move by Allstate Corp. last year.

An update on State Farm’s website says the insurer is working to ensure its long-term sustainability in California, and has “had to make some difficult but necessary decisions that will impact a portion of our California policyholders.”

Beside non-renew 30,000 homeowners, rental dwelling, and other property insurance policies, which includes residential community association and business owners, the varrier said it will withdraw from offering commercial apartment policies with the non-renewal of all of those roughly 42,000 policies.

“These actions are California-specific and will occur on a rolling basis over the next year, beginning on July 3, 2024, for homeowners, rental dwelling, residential community association and business owners policies and on August 20, 2024, for commercial apartment policies,” the announcement states.

The policies represent roughly 2% of State Farm General’s policy count in California, according to the company.

The California Department of Insurance seems to point a finger at the carrier’s financials.

“One of our roles as the insurance regulator is to hold insurance companies accountable for their words and deeds. State Farm General’s decision today raises serious questions about its financial situation — questions the company must answer to regulators,” the statement, which a spokesman asked to attribute to CDI spokesman Michael Soller, reads.

“As state regulators, we deal with companies that are national and multinational in scale. To be effective for Californians, we join forces with other states so we can understand the basis for insurance companies’ decisions and how they plan to recover financially.”

According to the statement, the CDI has been working with State Farm’s home state of Illinois “to get a full picture of its financial condition and plan for improvement.”

“We need to be confident in State Farm’s strategy moving forward to live up to its obligations to its California customers,” the statement continues.

The State Farm update states the decision “was not made lightly and only after careful analysis of State Farm General’s financial health,” which the company said “continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations. 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.”

This comes as California’s property insurer of last resort told lawmakers that it’s financially unprepared to cover the costs of a major catastrophe in the state. The plan now faces $311 billion in potential losses, up from $50 billion six years ago, California FAIR Plan president Victoria Roach said in a state legislative hearing.

The Hartford in January said it will discontinue writing new homeowners policies in California.

Liberty Mutual in July 2023 said it will stop offering its business owner’s policy (BOP) product in wildfire-prone state California. That same month Farmers said it will limit new homeowners insurance policies in California.

Eight of the state’s top 20 wildfires have occurred in the last half-dozen years, burning 8,512 structures, according to the Western Fire Chiefs Association. Those losses do not reflect the destruction from the Camp Fire in 2018, the state’s most destructive and deadliest fire, which destroyed 18,804 structures and cost over $16.5 billion.

A report from Gallagher Re last year shows the threat of damaging wildfires in conjunction with inflation and pricing challenges has led to a distressed insurance and reinsurance market, particularly in California.

The State Farm update said the company will notify customers impacted by the decision in advance of their policy expiration, and that independent contractor agents licensed in California will continue to service policies not impacted by the decisions.

 

[Allen Trent]

sure looks like price gouging me by cancelling all these policies

 

[fed up]

Now if the state would work to remove the dead debris which seems to be everywhere in California

 

[Allen Trent]

Now if the state would work to remove the dead debris which seems to be everywhere in California

Hopefully the voters remove them from office in upcoming elections. The real dangerous dead debris is those politicians

 

[DHK]

California insurance commissioner responds to State Farm non-renewal announcement

After State Farm announced it will not renew more than 70,000 insurance policies in California over the next year, the state's insurance commissioner is speaking out.

abc7.com

 

[fed up]

And Mr Lara ( along with the watchdog groups) gives no indication of what the State will be tasked to do in order to mitigate the loss potential for the residents.

 

[Allen Trent]

And Mr Lara ( along with the watchdog groups) gives no indication of what the State will be tasked to do in order to mitigate the loss potential for the residents.

Yup. What makes the FAIR plan less susceptible to failure with losses greater than revenue?

unlike Florida's Citizens plan that is backed by the state, my understanding is FAIR is not backed back any government protection, it is merely owned & operated by carriers.

 

[shawnmwalker]

Amazing to watch!