Partly as a result California’s insurance rates are relatively discounted despite the state’s otherwise astronomical cost of living and rising wildfire risk.

The Golden State’s insurance market is ruled by Proposition 103, a voter referendum that passed in 1988 and requires insurers in the state to seek approval from the California Department of Insurance before hiking rates. The result is an unstable insurance market that appears to be teetering on the edge of crisis. Meanwhile, Californians who have been unable to secure policies from insurance companies have flocked to the California FAIR Plan, the state-run insurer of last resort. As a result, the cost of homeowners insurance has risen by a quarter since 2015, and insurance companies have been withdrawing coverage in the most fire-prone parts of the state in an attempt to reduce the liability on their books. Since 2017, when a series of catastrophic fires caused $33 billion in damages, insurers in the state have lost two decades of underwriting profit. State Farm indicated it would continue to keep the customers it already has on its books in California.Ĭalifornia’s insurance industry has been struggling to stay afloat in a state increasingly ravaged by fires and floods. “It’s necessary to take these actions now to improve the company’s financial strength,” the company noted in a press release. Last week, the company revealed that it would no longer offer policies to new Golden State customers due to “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.”

The latest sign of the insurance industry tumult came from State Farm, the largest homeowners insurance provider in California. As a result, homeowners are contending with skyrocketing premium payments and even beginning to struggle to find insurers willing to cover them at all. In some cases, companies have even gone under in the aftermath of a particularly damaging natural disaster. As climate change fuels more intense storms and wildfires, home insurers in disaster-prone states like Texas, Louisiana, and Florida have stopped issuing and renewing policies. Across the country, the climate crisis is wreaking havoc on insurance markets.

Golden state farm insuarnac