State Farm to stop insurance to new customers in California

State Farm will no longer offer home insurance to new customers in California due to historic construction cost increases and rapidly growing catastrophe exposure. Starting Saturday, State Farm General Insurance Company will discontinue accepting new applications for all business and personal lines property and casualty insurance, the company said in a statement.

The company added that historic increases in construction costs outpacing inflation, rapidly growing disaster exposure, and a challenging reinsurance market were the reasons behind the policy change.

The announcement comes after a season of wildfires in the state last year. State Farm said in its statement that it acknowledges government officials and the California Department of Insurance CDI for their wildfire loss mitigation efforts.

We take seriously our responsibility to manage risk, the company said today in a statement. We pledge to work constructively with the CDI and policymakers to improve market capacity in California. To enhance the financial stability of the company, however, it is necessary to take these steps now. State Farm will continue to evaluate our approach based on changing market conditions, it said in a statement.