State Farm will not renew approximately 72,000 property and commercial apartment policies, of which approximately 30,000 will be for 'homeowner, rental, rental, residential community and business owner insurance,' and the remainder of which are for commercial apartment policies, the Sacramento Bee reports.
Last May the company announced that it would stop accepting applications for property and business properties due to higher construction costs, growing risks from wildfires and other catastrophic events, and challenges related to how it insures its own business.
Last week, the company cited those challenges in an announcement, along with "the limitations of working within decades-old insurance regulations."
California says it's fixing the issues, with Insurance Commissioner Ricardo Lara announcing upcoming regulatory changes that his office says "will improve conditions for the overall market."
According to spokesman Michael Stoller, State Farm's decision "raises serious questions about its financial situation — questions the company must answer to regulators."
The action was taken by State Farm General Insurance Company, which sells homeowners insurance in California. The company acknowledged the department’s proposed changes and vowed to continue to work with the agency to “establish an environment in which insurance rates are better aligned with risk.”
In December, the department approved a 20% average rate hike for the company’s homeowner insurance policies. -Sacramento Bee
The insurer says it will begin canceling policies in July for homeowners, and August for commercial properties, which will occur on a rolling basis over the next year.
The move comes two years after AIG pulled out of the Golden State over wildfire risk.
