Zero Hedge |May 28, 2023
Faltering California took another economic hit on Friday, as America’s largest personal lines insurer said it would immediately stop selling new home insurance policies in the state. California is the largest property and casualty insurance market in the country.
State Farm attributed the decision to three factors: “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.” Reinsurance is a method of transferring some of an insurer’s risk to other insurers.
Existing policies will stay in effect — for now. There’s always the possibility that, if things keep deteriorating, State Farm could decide to “non-renew” current policy-holders. That’s what AIG did last year, sending thousands of high-end homeowners scrambling to find new coverage.