State Farm will no longer offer home insurance to new customers in California, citing "historic" construction cost increases and "rapidly growing catastrophe exposure."
Beginning Saturday, State Farm General Insurance Company will stop accepting new applications including all business and personal lines property and casualty insurance, the company said in a news release.
The changes do not affect personal auto insurance.
The company said "historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market" were the reasons behind the policy change.
Their announcement comes after a bout of wildfires in the state last year. There were 7,490 fires sparked in the state in 2022, a drop of 256 from the five-year average of 7,746, according to a Dec. 1, 2022 article by CalMatters.
State Farm said in its statement that it recognizes 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. "We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to improve the company’s financial strength."
"We will continue to evaluate our approach based on changing market conditions," State Farm said.