State Farm Insurance Agency is no longer accepting applications from California residents.
According to a press release, State Farm announced that as of Saturday, they have discontinued accepting new applications for both business and personal lines property and casualty insurance. The company’s decision to halt new applications for property and casualty insurance, will not have any impact on existing customers. Furthermore, State Farm will still provide auto insurance services in the state.
State Farm claims the reason behind the decision is due to “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.” The agency emphasized its commitment to risk management and expressed its dedication to collaborating with state policymakers and the California Department of Insurance to enhance the market capacity. However, the decision to cease new applications was deemed necessary to ensure the company’s financial stability and well-being.
“It’s necessary to take these actions now to improve the company’s financial strength,” the statement read. “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.”
In recent years, the combination of a prolonged megadrought lasting decades and the effects of climate change has intensified the wildfire risk in California. The severe drought experienced during the winter months creates extremely dry conditions during the subsequent dry season, resembling conditions that can easily ignite intense wildfires with even the smallest spark.