State Farm General Insurance Company will not accept new applications for property insurance and other policies in California, citing “historic” increases in construction costs and inflation, the corporate said Friday.
Starting Saturday, the Illinois-based insurance group will stop accepting applications for property and casualty insurance for businesses and individuals.
The change doesn’t affect the insurance of a passenger vehicle.
“Ogólne Towarzystwo Ubezpieczeń PGR made this decision as a result of the historical increase in construction costs exceeding inflation, rapidly growing exposure to disasters and a demanding reinsurance market”, the corporate he said in a communiqué. “The Insurance Department is concentrated on keeping our homes and communities protected.”
The insurance company said motion was needed to enhance its financial strength.
“We take our responsibility to administer risk seriously. We commend the governor’s administration, legislators, and the California Department of Insurance (CDI) for their efforts to mitigate fire-related losses,” the corporate added. “Nonetheless, it’s crucial to take these actions now to enhance the corporate’s financial strength.”
It was reported that State Farm agents in California would proceed to serve existing customers.
A spokesperson for the California Department of Insurance told Fox Business it was committed to protecting customers.
“Aspects affecting the choice of the state farm are beyond our control, including climate change, reinsurance costs affecting your complete insurance industry and global inflation,” the spokesperson said.
California has among the costliest housing costs within the country amid a shortage that many imagine has exacerbated the statewide homelessness crisis.
The state plans to spend about $30 million to construct 1,200 small homes.
In February, State Farm withheld new insurance for some Kia and Hyundai drivers in several states since the vehicles were liable to theft.