State Farm, Like Allstate, Stops Issuing New Home And Business Insurance In California

 June 3, 2023

Last year, Allstate Insurance quietly stopped selling new homeowner and business insurance in the State of California. Now a new report confirms that the decision of State Farm to do the same this week, was merely following suit and not a new issue.

Janet Ruiz of the Insurance Information Institute, claims that State Farm over the past 5 years, related to the insurance companies exposure and the cost of construction, - has lost all of its underwriting profits, that were gained in the last 20 years. She further went on to discuss the effects that California’s Proposition 103 has had on the insurance industry by promoting falsely low levels of insurance to consumers. According to the California Department of Insurance, Proposition 103 requires insurance companies to obtain “prior approval” from the California Insurance Department before implementation of their rates.

According to a recent report by San Francisco Chronicle-

“Allstate has stopped writing new homeowner, condominium and commercial insurance policies in California, the company confirmed to The Chronicle.

The insurer, the fourth largest property and casualty insurance provider in the state in 2021, paused new policies “so we can continue to protect current customers,” spokesperson Brittany Nash wrote in an email to the Chronicle.

The pause began last year but appeared to receive only a passing mention in industry publications. The Chronicle learned of the development this week, after reviewing an Allstate rate increase request to the California Department of Insurance.”

-San Francisco Chronicle

Last year, when Allstate stopped underwriting insurance for new clients, it did not explain why it decided to stop selling insurance to new customers in California. State Farm did so, it claimed, because of the increased risk of wildfires and the rising costs of construction in the state, together with state’s regulators, who would not allow it to price new policies based on future anticipated risk, but rather only on historical risk. They chose instead to limit their risk period - dropping new clients as a result.

The only state in the country that imposes restrictions of this kind on insurance policies, to keep prices down, California now is experiencing the unintended consequences that will now affect California residents and investors who need to find affordable insurance – less choices.

“We should favor innovation and freedom over regulation.”

-George Allen
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