State Farm General Insurance Company announced Friday that it will no longer accept new applications for property and casualty policies in the business and personal lines.
State Farm General Insurance Company said that it made the decision because of historic increases in construction cost outpacing inflation and rapidly increasing catastrophe exposure.
Wall Street Journal reports that the change will not affect current home insurance policies or new auto insurance.
State Farm, one California’s largest insurers, was also named the country’s top home insurer by volume of premiums.
The company acknowledged the efforts made by Gov. In a statement, the company pledged to work with California’s Department of Insurance, Newsom (D-Calif. ), and legislators to “help build capacity.”
The Fortune 500 insurance company says that the move was necessary to “improve its financial strength.”
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Michael Soller, Northern California’s deputy commissioner of insurance, cited climate changes as a major factor in the decision.
Soller, in a press release following an interview with The Journal, said that “the factors driving State Farm’s decision are outside our control.”
Soller told The Outlet that wildfire risks are among the root causes of the Golden State’s insurance problems.
Soller pointed to wildfire-loss-mitigation efforts by the governor, lawmakers, and insurance regulators, including community fire-prevention grants and building fire breaks. The Golden State will also be launching an insurance discount program which takes into consideration the efforts of consumers to mitigate wildfires, he told the outlet.
Fox Business reported that California’s housing prices are among the most expensive in the nation, and housing shortages nationwide have exacerbated California’s homelessness problem.
KUSI reported this month that the state spent $20 billion over the past five years on homelessness.
The problem is worsening despite the large taxpayer expenditure.
In an interview with KUSI, state Senate Minority leader Brian Jones (R), said: “There’s a solution.” Jones cited a recent trip to Houston as evidence of Texas’s approach. He said that he searched for large compartments similar to those found in California during his visit. He says that he only found four tents, and a few panhandlers.
He said that Texas doesn’t allow tent camps and they enforce all the laws that are in place when it comes drug crimes, thefts, and sexual assaults.
“The government in California… has allowed these encampments… we can’t let these conditions continue on our streets,” he said, calling for compassion to address the problem.
