Ghosted by Jake… Over the weekend State Farm stopped taking applications for new home insurance policies in California, saying its wildfires and rebuilding costs are hurting its bottom line. The “like a good neighbor” company was the largest home-insurance provider in the US and CA as of 2021, with more than 8% of the state’s market share.
- More destructive: The Golden State’s wildfire season has burned through 2M+ acres on average each year for the past half decade. The deadly Camp Fire in 2018 destroyed 11K homes, displaced 50K residents, and resulted in staggering losses for insurers.
Frightful weather… Extreme weather is squeezing the home-insurance biz from coast to coast. In response to events like fires and floods, insurers raise premiums and up the eligibility requirements for residents to get a policy, especially if they live in high-risk areas. In CA, regulators barred insurers from canceling or refusing to renew policies in some ZIP codes.
Last resort: Last year American International Group (AIG) also left CA, and in hurricane-prone Louisiana 20+ insurers have gone bankrupt or left the state over the past two years, leaving thousands dependent on state resources.
Insurance crisis: 9 in 10 US homeowners saw their premiums rise from 2021 to 2022, insurance marketplace Policygenius reported. Premiums in Louisiana were 46% higher than the national average as of January.
The problem could get worse… Structural damage from severe weather totaled $145B in 2021, and the climate crisis is expected to make weather catastrophes even more frequent. Ditching areas where insurance is most critical may help corporate profits, but it could leave more people uninsured or dependent on state-run plans made for those who can’t get traditional insurance.