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IPFS News Link • Natural Disasters

Proposition 103 Backfires, State Farm to Cancel 72,000 California Policies

• Mish Talk

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.