State Farm will discontinue coverage for 72,000 houses and apartments in California starting this summer, the insurance giant said this week, nine months after announcing it would not issue new home policies in the state
The Illinois-based company, California’s largest insurer, cited soaring costs, the increasing risk of catastrophes like wildfires and outdated regulations as reasons it won’t renew the policies on 30,000 houses and 42,000 apartments, the Bay Area News Group reported Thursday.
Part of the problem is that many of the states where insurance companies are leaving have rules that limit what they can charge. That sounds good in principle, but with climate change causing these disasters to happen more often the insurance companies are bleeding money. Ultimately insurance as an industry can’t work if you keep having losses, and if you can’t increase prices to cope then you have no choice but to withdraw.
I’ve sure State Farm is happy to cover catastrophe-prone areas, but only if they won’t lose money on average.