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State Farm To Longer Accept Any New Property, Casualty Insurance Applications In CA.
State Farm Insurance, the largest property and casualty insurance company in California, announced Friday they would no longer be accepting new applications for any kind of insurance other than personal vehicle insurance due to large increases in construction costs and inflation.
The Illinois-based company specifically noted in a press release on Friday that all new applications for business and personal lines property and casualty insurance will no longer be accepted in California beginning May 27th.
“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,” said the company in a press release on Friday. “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.”
While insurance companies have been reducing their presence in California in the past few years, some have made it harder for residents to obtain insurance, such as GEICO closing down all 38 of their offices in the state last year and State Farm raising driving insurance rates in March. A complete pull out of new insurance applications deals a major blow to the state.
“Costs, inflation, growing catastrophe exposure, that last one meaning wildfires, have all played a part in insurance companies balking at California,” explained Trevor Connery, a lobbyist who has worked for insurance companies in the past, to the Globe on Friday. “But even Farmers, GEICO, and others still off full services. State Farm has just been seeing too many claims and really doesn’t want to risk more right now.”
Click here to read the full article in California Globe
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In my opinion, almost all insurance is a scam. You faithfully pay premiums year after year, even after their premiums rise year after year, but heaven forbid you submit a claim. Either your rates go up or you get dropped. It’s a scam. To me, it’s a gamble that we both take. I gamble my premium that nothing will happen. If nothing happens, they keep my premium. If something does happen, they should pay up and end of story – we start over again. Consider Las Vegas. Same thing. I place a $10 bet on the Black Jack table. If I lose, the house keeps my $10 bet. If I win, does the house raise my minimum bet to $12 next time to recoup their loses? No, it does not. The way it is, there is no way the insurance companies lose. If course there is the issue of risk but that should be considered in the premium.