Headline RoundupMay 30th, 2023

State Farm Stops Accepting Applications for Homeowner Insurance in California

AllSides Summary

On Friday, State Farm announced it would no longer accept homeowner insurance applications in California due to large increases in construction costs, risks from wildfires, and a difficult reinsurance market.

Key Details: The policy, which started Saturday, does not impact personal auto insurance, and State Farm will continue to serve customers with existing homeowner insurance policies. The company says they will work with the California Department of Insurance to make changes and restore market strength in California.

Key Quote: “We take seriously our responsibility to manage risk,” the company said. "State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market...we will continue to evaluate our approach based on changing market conditions."

For Context: In recent years, property insurers have pulled insurance coverage from tens of thousands of California homeowners in the wake of devastating wildfires. In 2022, California became the first state to offer discounts to homeowners who reduce wildfire risk.

How the Media Covered it: Sources across the political spectrum covered State Farm's announcement. Some left-rated sources noted that State Farm reported a net loss of $6.7 billion in 2022, mostly due to losses in the auto division. Some right-rated sources noted that State Farm holds the largest share of casualty and property insurance policies in the U.S. and control about 8.3% of the market in California.

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