State Farm has suspended 72,000 home insurance policies in California in the latest blow to the state insurance market

SACRAMENTO, Calif. (AP) — State Farm will stop covering 72,000 California homes and apartments starting this summer, the insurance giant said this week. Nine months after the announcement No new home policies will be issued in the state

The Illinois-based company, the largest insurer in California, cited rising costs, increased risks of disasters such as wildfires and outdated regulations as reasons for not renewing policies on 30,000 homes and 42,000 apartments. Bay Area News Group reported Thursday.

“This decision was not made lightly and only after a careful analysis of State Farm General's financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and restrictions on operating within decades-old insurance regulations,” the company said in a statement. Wednesday statement.

“State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our clients and comply with applicable solvency laws,” she continued. “It is essential to take these actions now.”

The move comes as California's elected insurance commissioner undertakes a year-long overhaul of home insurance regulations aimed at calming the state's collapsing market by giving insurers more freedom to raise premiums while extracting commitments from them to expand coverage in areas at risk from fires. As reported by the news group.

The California Department of Insurance said State Farm will have to answer regulators' questions about its decision to discontinue coverage.

“One of our roles as an insurance regulator is to hold insurance companies accountable for their words and actions,” Deputy Insurance Commissioner Michael Soler said. “We need to be confident that State Farm's strategy moving forward is to meet its obligations to its California customers.”

It was not clear whether the ministry would launch an investigation.

Last June, State Farm said it would do so Stop accepting requests For all commercial and personal lines property and casualty insurance, noting inflation, a challenging reinsurance market and “rapid catastrophe exposure.”

The company said the newly announced cancellations represent just over 2% of its policies in California. It did not mention their whereabouts or the criteria it used to determine whether they would not be renewed.