Citing wildfire risk, State Farm will not renew policies on 30,000 homes and 42,000 business in California. Blame the state, not insurers. 
Wildfire Risk Exodus
Bloomberg reports State Farm Cuts 72,000 California Policies, Citing Wildfire Risk
State Farm General Insurance Co. will cut about 72,000 policies in California beginning in July, the latest move by the state’s biggest insurer to cope with growing risks from wildfires and other natural disasters.
The move comes just nine months after State Farm announced plans to stop issuing new coverage in the most populous US state. In the latest announcement on March 20, the company also cited reinsurance costs and constraints posed by decades-old insurance rules as reasons why it decided not to renew policies on 30,000 homes and 42,000 commercial apartments.
Policy cancellations will take effect on July 3 for homeowners, renters, and businesses, with commercial apartment policies extended until Aug. 20.
In the past year alone, seven of some of the state’s largest insurers, including Allstate and The Hartford, have either halted or curtailed new homeowner policies, leaving high-risk area residents with limited and costly coverage options.
As a result, a growing number of Californians have resorted to the FAIR plan, a state-mandated insurance safety net offering minimal coverage. The plan wrote a record 15,000 new policies in February, and it now covers about 370,000 homeowners, more than double the number five years ago.
California’s insurance rates have historically been capped due to Proposition 103, which requires insurers to get state approval before raising premiums, and limiting their ability to adjust rates based on projected risks.
Cap Rates and Guess What
Caping insurance rates has the same effect as capping rents.
The former leads to an exodus of insurers. The latter lead to an exodus of builders and repairs.
The Idiot’s Response
Carmen Balber, the executive director of Consumer Watchdog, said “The industry is not going to start covering Californians again without a mandate.”
“That is why we think the legislature needs to step in and require insurance companies to cover people.”
Force companies to cover people. What a hoot. The insurers would all leave and everyone would be on the “FAIR” plan.
In related news ….
Congratulations to NY, IL, LA, and CA for Losing the Most Population
People in California, increasingly getting sick of the state’s progressive madness, are voting with their feet.
For discussion, please see Congratulations to NY, IL, LA, and CA for Losing the Most Population
The Cobra Effect: The cobra effect is a phenomenon that occurs when a Govt policy, intended to solve a problem, actually makes it worse or even creates an entirely new problem.
It comes from the Govt in Delhi, India, offering a bounty for cobra skins, to reduce the population of snakes in the city. Citizens started breeding cobras in cages to make easy money. When the program failed to reduce the snake population, the Govt rescinded the program, so the citizens simply freed the captive snakes (no point feeding them for nothing). Resulting in a cobra plague.
Governments are useless at nearly everything they do. They most often make everything worse.
There’s probably a better business model that can work. State Farm is a for profit company that seems to have money to do commercials every year with NFL and NBA stars but leaves homeowners high and dry.
You can say that about any company. In the meantime, if that company made a profit it is not only able to pay all of its employees, but also has the money to purchase outside the business such as commercials also employing those advertisers.
Voting with their feet? Classic, moving to a conservative state and then turning it into Calicrazy squared.
Leftists are insane and need to be treated as such. When someone is mentally sick, in this case millions of derranged demoncrats, you don’t try and reason with them because it won’t work. But you also, don’t put them in charge or you’re as crazy as they are.
Why Louisiana?
This is a good business decision for the insurance companies. Democrat control of this state will only bring more of the same.
California taxpayers are now the kulaks of America.
Pray tell what happen in gulf states when insurance companies dropped coverage there.
The other way to look at this is State farm cannot exist without gouging customers. Look at their profits last year.
Oh Please..
Yes, didn’t they lose about $7 billion in Auto last year? That’s what I seem to recall.
State farm lost over $13 billion in 2022. It can’t keep that up for long
72000 cancelled. Eat it loser.
Look at apples profits! Are they gouging their customers? Did you set the price on what a cell phone should cost? Then how can you set the price of what an insurance policy should cost?
If you don’t like the cost of an iPhone, don’t by one.
I live in the heart of Orange County, CA. My HOI is $1500/yr. via Mercury. I’m at no risk of cancellation because my house wasn’t built in the middle of metric tons of kindling or where hurricanes prevail. People make all kinds of risky decisions and we should all be cheering full market discovery, while of course shouting down the tyrants.
“The Federal Government will pay for the entire cost of the bridge”.
-FJB, and I do mean F.
I’m not into swearing at the occupant of the WH no matter who they might be, but I’d imagine that the shipowner and their insurance are totally liable for the entire cost of rebuilding the bridge.
Bill them first, and the taxpayer last.
It’s going to get worse in California before it gets worse. I lived there for many years then left 4 years ago.
I’m currently lobbying the NYS Legislature and governor to mandate In & Out Burgers open restaurants in NY!!!
Wish me luck!!!
The FAIR plan is funded by the insurance companies. When they leave, they don’t pay.
I’ve read that the 1906 San Francisco earthquake lead to the Panic of 1907. If not for the 1906 earthquake and the Panic of 1907, would the Federal Reserve been created in 1913?
Yes, because many bank failures occurred before 1906. The Great Depression was a significant enough crisis not to go to waste.
Great Depression didn’t start until 1929. Federal Reserve had already been in existence for 13 years.
Remember the CAL FIRE fee? They billed property owners and assessed fines if they didn’t pay. They lost the lawsuit but never got ordered to refund anything.
Why are insurance companies dropping 100,000s of policies in Florida?
Similar reason. Natural disaster risk (fires in California and hurricanes in Florida).
But the post makes it sound like it is regulation but it isnt. State farm seems to have money for superstar athletes to shoot commercials every year. Maybe if insurance companies were forced to cover policy holders with a national law and spend 85-90% of their income on coverage then they would actually not be able to just walk away.
Insurers have faced catastrophic losses in the last decade in CA and FL the most. Wildfires, floods, landslides, hurricanes have depleted their pools of money. The CA insurance comissioner determined that mudslides in a burn area from years ago must be paid out under fire policies. That wasn’t part of the definition when sold, so insurers didn’t model that risk accordingly, but still had to pay out. Investors, who put up the money, have been losing. They aren’t a charity, so they put their money elsewhere. Catastrophic events are more frequent than they used to be so models are changing. Add to it that the remaining companies also pay out the fair plan losses and tell me where you’d put your money. Yes, insurance needs some regulation, but the government has made it impossible for them to continue by not allowing them to raise rates despite the losses and market shifts. Thank Ricardo Lara for “protecting” the consumer.
Carmen Balber needs to start an insurance company to insure homes and businesses instead of forcing others
Those who can, do. Those who can’t, “hold” others “accountable.”
CA. continues to prove itself, as an unworthy place of insurance coverage, because of the lack of effort by the state itself to change things that would help prevent such tragedies. As usual with CA. (And All Democrat Run Cities), they point to a solution of “Force”
This is the way they generally operate towards most things in the state. CA. Doesn’t have the money, because they have blown it all, much like Biden did with Ukraine. So their answer is through forced voluntary efforts to help.
By now, anyone residing in CA. Understands this is the way things are done. Via decree or dictate! So why is anyone still living there?
Gavin will never win a Presidential election at this point. All the Republicans have to do is ask one simple question…
Q1. Do you want the entire United States of America, to look exactly like California?
Yes – Vote Democrat OR No – Vote Republican
It’s really that simple…
California’s fast food minimum wage pushed the price of a burger and fries to $12.00.
And you didn’t expect them to rise their food prices without minimum wage? Get real.
Try a diet.
same thing in kansas with tornados. One went 35 miles from where I live and my rates doubled. Now im on my 3rd insurer in 2 years and this one is threatening to drop me over heavy moss growth on my roof. There is no moss. Its a green roof.
“That is why we think the legislature needs to step in and require insurance companies to cover people.”
The state will drive insurance companies out of the state and then, of course, offer an price-uncompetitive alternative that is in actually a form of taxation.
I live in CA and I have a house in the mountains which can only be covered by the FAIR plan – the state run insurer of last resort. It’s very expensive, about four times the cost of private insurance, because the FAIR plan doesn’t have its rates capped, and if there’s an insurable event anywhere in the state, they can raise the rates for all policyholders to cover it.
CA doesn’t allow insurance to consider your individual risk factors when setting rates, they define risk “zones” and everyone within a zone pays the same; the home in the city away from fire risk, and the house in the mountains among sap drenched trees.
We have the same issue with car insurance. Your rates are based on the values of the cars in your area, so when your neighbors buy lots of EV’s, your rates to go up to cover their costs. It’s a mess. I really wish the government would quit trying to help.
If you’re pondering moving, do so while you still can. The time will come when you cannot and you’ll be stuck in that progressive utopia.
Blame the sate not the insurers? Maybe, but I suspect that unregulated development in fire prone areas and climate change denial share some of the responsibility.
You really think California doesn’t have strict regulations and is run by climate change deniers? Wow.
CA boomers can sell their houses for $1M/$3M, collect 4%/5%, save taxes, insurance,
maintenance and utilities and move elsewhere. The bubbles indicate. that 1.5%(??) out of 40 million ==> 6 million left the state between 2020 and 2023.
NYC and SF allow non-citizens to vote in local elections.
Gotta be honest. Can’t get hurricane insurance in Florida (even from the state insurer of last resort). Those who even can get insurance pay a fortune for it.
Problem is that insurance is parceled out by state so those states prone to disasters have expensive and hard to get insurance.
Sure California has illogical regulations from an incompetent government, but insurance would be difficult to get anyway in a state with a lot of forest fires, floods, and earthquakes
Florida is becoming unaffordable for alot of people.
As someone who lives there, I’d say it’s been happening for quite a while. I know a lot of people who have left in the past 15 years because they couldn’t make it. All of them were in the service industry which doesn’t pay a lot but used to be enough before things started getting expensive (homes, renting, insurance etc).
California can do something about wildfires (controlled burns). It can’t eliminate them, esp the arson ones (which account for a large number of them) but it can reduce the number and their effects. Sadly, it doesn’t want to because of the eco-crazies.
Unfortunately there is not much to be done about earthquakes and floods.
Floods- don’t build in flood zones. Don’t rebuild in flood zones
“ People in California, increasingly getting sick of the state’s progressive madness, are voting with their feet.”
And working hard to rebuild crazy clown world wherever they move to.
True but … many who are finding themselves in Florida seem to be leaving the blue behind (unless they were already in the red minority in Cali). But yes, the fear that this is California’s way to make the whole nation as crazy as they are … is a legitimate fear.
happened to oregon starting in the 70’s washington not long after
if the socialist plan is STATE control, its working…Atlas Shrugged…
Skyrocketing insurance rates and not covering high risk areas = profits! profits! profits! Insurance companies #1 in my portfolio now. Since train noises no longer allowed here I will finish with..$$.
Agree, greedy insurance companies working with corrupt Democrat politicians.
I’ve generally been pleased with the insurance companies in my portfolio. Boring but steady.
after State Farm dumps these expensive states, will their insurance rates in normal states be adjusted lower?
or will State Farm burn the extra billions on more wasteful marketing&branding via dead media?
Lower rates? Lol. Heck no. They would do share buybacks, special dividends to shareholders or invest in M&A before they lower rates.
Know the difference between a stock insurance company and a mutual. Start there.
You don’t think private companies issue stock internally? or dividends to internal shareholders? You know nothing about corporate operations.
State Farm executive compensation is all cash.
If State Farm’s rates are too high, use another insurer. There are many. Insurance isn’t even close to being a monopoly.
State Farm is a mutual company Policy holders own the company
The French Laundry Insurance Company Of The State Of California has a nice ring to it.
State Farm is a Mutual company that is owned by the policyholders, not the shareholders. As a long-time State Farm customer, when the company has a positive return after paying expenses, the excess cash can be held and added to their reserve fund or can be distributed to the policy holders.
It doesn’t happen often, but over the years I have received a few checks from them when they had a positive year.
Is it possible that … the goal is actually to further decrease population in these deep blue states, as test beds for economies losing workers with worsening demographics. Calculative Intelligence will replace jobs. Robotics will replace jobs. They will also ostensibly create better metrics of efficiencies, if one thinks that economies are only based on metrics of efficiencies and not life and quality of life as well. Test beds, similar to Covid-19 as a biowarfare, which always includes the engineered pathogen and engineered antidote like the never before exposed to human population mRNA gene therapy, along with lockdowns, propaganda and censorship etc.
Or, could it simply be that as states become more populated, almost 40 million in CA, they face problems that a state like Wyoming doesn’t? Property values rise when more people share the space. I’m not saying it’s run beautifully, but perhaps simple economics is a major factor vs a ‘goal’ as you called it. Demand to live in CA drove up property values. Now that it’s getting so expensive, people are moving because of affordability. Managing giant states is a challenge for either party. They both struggle as you are seeing happen in Florida and Texas as they grow. More people equals new and different problems. That said, yes, several policies in CA are not good ones, but they are also attempts to deal with problems on scales not seen in other states simply due to volumes that others don’t have. Combine that with the diversity the state has and you’ll understand why its collective mindset is so different than other states. Economics will push it back to normal eventually. Drug policies are starting to get stricter again. There’s no ‘goal’ to make other states like CA. Those who are moving are not happy. They don’t want other states to be CA. You’re just watching those states feel the same stress CA has as populations shift.