State Farm halts new business in California on runaway costs & cats

US property insurer  State Farm has ceased accepting new business in the US state of California across all business and personal property and casualty lines save personal motor as runaway costs and cats, including wildfire, have made the market a money-loser.

State Farm cited “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market” in justifying its decision.

“It’s necessary to take these actions now to improve the company’s financial strength.”

Wildfire threats resounded in the company’s announcement, although State Farm tipped its hat to “wildfire loss mitigation efforts” taken to date by California authorities.

State Farm held out some hope that its suspension is short term. The group will “continue to evaluate our approach based on changing market conditions” and “work constructively” with state authorities “to help build market capacity.”

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