State Farm announced its next plans on Wednesday. Drop 72,000 insurance policies California cited inflation and several other issues.
According to a recent state farm press release, insurance companies will cancel or not renew tens of thousands of insurance policies “sequentially from July 3, 2024 through next year.” This decision will affect homeowners, business owners, commercial apartments, and housing associations.
The insurer said it is “working to ensure its long-term sustainability in California,” and that nonrenewals and cancellations “represent just over 2% of State Farm General’s policy volume in the state.” I will,” he pointed out.
“This decision was not made lightly, as State Farm continues to be affected by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations. “The decision was made only after a careful analysis of General’s financial health,” a State Farm press release said. read.
The company says, “We need to take immediate action.”
California Insurance Commissioner Ricardo Lara on Friday responded to State Farm’s recent announcement.
“This is a real crisis,” Lara said. KABC Eyewitness News. He said he would like to review the financial details.
“Insurance companies are different from utility companies,” he explained. “By law, they don’t have to be here. And when we try to overregulate, you see what happened after the Northridge earthquake. Congress steps in and tries to overregulate, and they try to overregulate California. I no longer have earthquake insurance in the state.” ”
Lara said the current models insurance companies use to assess risk are “black boxes.”
“We are going to change this to be more transparent,” he declared. “We reduce the risk for these communities and the insurance companies keep writing, which will encourage more insurance companies to write and drive down costs.”
Individuals whose insurance policies are affected by State Farm’s latest announcement are encouraged to notify the California Department of Insurance.
“We will make sure to bring an insurance professional with us to help you with the transition and connect you with insurance companies that write policies in California,” Lara added.
Consumer Watchdog’s Carmen Barber told KABC that the insurance company’s decision to cancel tens of thousands of policies shows that Lara’s “plan is not working.”
“For years, we’ve been working to force insurance companies that want to sell home insurance and auto insurance in California to do the right thing and require California to protect their homes. “We’re asking the insurance secretary to support that policy change. It needs to pass Congress,” Barber said.
In 2022, Allstate stopped offering home insurance to new customers in California, citing increased wildfire risk and rising construction costs. Associated Press report.
Allstate said at the time that “the cost of insuring California’s new home customers is much higher than insurance premiums due to wildfires, rising home repair costs, and rising reinsurance premiums.” Stated.
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