News release
State Farm General Insurance Company is working to ensure its long-term sustainability in California, and in doing so, “has had to make some difficult but necessary decisions,” the company said in a news release announcing more than 70,000 California policies will not be renewed.
The release said these decisions will impact a portion of California policyholders as follows:
• Non-renew approximately 30,000 homeowners, rental dwelling, and other property insurance policies (residential community association and business owners). A rental dwelling policy insures rental homeowners. Renters insurance is not affected.
• Withdraw from offering commercial apartment policies with the non-renewal of all of those approximately 42,000 policies. A commercial apartment policy insures apartment owners. Renters insurance is not affected.
These actions are California-specific and will occur on a rolling basis over the next year, beginning on July 3, for homeowners, rental dwelling, residential community association and business owners policies and on Aug. 20, for commercial apartment policies.
Combined, these policies represent just over 2% of State Farm General’s policy count in California.
“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 release said. “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.”
The release continued:
“We also recognize the insurance commissioner’s proposed regulatory reforms, such as streamlining the rate application process, accounting for catastrophe modeling and reinsurance costs in rates, and addressing FAIR Plan vulnerabilities. We will continue to work constructively with the California Department of Insurance, the governor’s office, and policymakers to actively pursue these reforms in order to establish an environment in which insurance rates are better aligned with risk. We will notify customers impacted by this decision in advance of their policy expiration to provide information on other coverage options.”
State Farm independent contractor agents licensed in California will continue to service policies not impacted by these decisions, the release said. State Farm General’s May 2023 decision regarding new applications remains unchanged. The company said it will evaluate the need for any additional business actions as market conditions change.
