Insurance giant halts sale of new home policies in California due to wildfires

theguardian.com:

The insurance giant State Farm, America’s biggest car and home insurer by premium volume, will halt the sale of new home insurance policies in California, citing wildfire risk and inflation of construction costs.

Starting on Saturday, the company will not accept insurance applications for business and personal lines property and casualty insurance. The company will still accept auto insurance applicants.

“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,” the company said in a statement.

“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.”

Existing customers insured by State Farm will not be impacted by the decision.

In response to State Farm’s statement, a spokesperson with the California department of insurance told Fox Business News that it is working to protect homeowners.

“The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry and global inflation,” said the spokesperson.

State Farm is not the only insurance company to disrupt coverage over wildfires. American International Group, a multinational insurance company, notified thousands of California homeowners last year that their policies would not be renewed, the Wall Street Journal