'Crisis' Declared in California as State Farm Announces 72,000 Policies to Be Cut
From aesthetic beauty to abundant resources, California boasts every natural advantage. Nothing but liberalism could have wrought its destruction.
On Wednesday, State Farm General Insurance Co. announced in a news release that it will not renew insurance policies for approximately 72,000 property owners in the Golden State, prompting California’s insurance commissioner, Ricardo Lara, to sound the alarm.
“This is a real crisis,” Lara told KABC-TV in Los Angeles.
Indeed, the loss of coverage will hit property owners this summer, the company’s news release said.
Beginning July 3, State Farm will non-renew insurance policies for approximately 30,000 homeowners and other property owners.
Then, on Aug. 20, the company will non-renew approximately 42,000 commercial apartment insurance policies.
All told, those 72,000 non-renewals account for more than 2 percent of the company’s total policies in the state, according to the release.
Remarkably, State Farm described its action as “California-specific.”
According to Insurance Business, the company in 2023 ranked as by far the largest home insurance provider in the United States.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” the news release said.
The company also pledged to work with state officials and the private sector to “establish an environment in which insurance rates are better aligned with risk.”
In other words, Bidenomics — inflation — and the liberal state’s regulatory regime have forced State Farm’s hand.
Lara, at least, recognized the state government’s mistakes and acknowledged that it cannot bully a company like State Farm.
“Insurance companies are not like utility companies,” Lara told KABC. “By law, they don’t have to be here, and when we try to overregulate, we’ll see what happened after the Northridge earthquake, when the legislature came in and tried to overregulate, and they no longer write earthquake insurance in California.”
According to the California Earthquake Authority, the 1994 Northridge earthquake “shook the foundation of the residential insurance industry.” Companies grew skittish about offering earthquake insurance under terms required by law. So the California legislature responded by creating the CEA, a “not-for-profit, publicly managed, privately funded entity” that today provides two-thirds of California’s residential earthquake insurance policies.
Clearly, Lara intended to draw a parallel. Three decades ago, overregulation effectively drove private companies out of the earthquake insurance business. And the same thing could happen today in home insurance generally if the state does not get its act together.
As long as Californians continue to elect liberals, however, that will prove impossible.
After all, a recent audit showed the state has liabilities far in excess of its assets. And the future looks bleak. The state’s new $20 minimum wage for fast-food workers, for instance, is already costing people their jobs.
Meanwhile, crime and illegal immigration have surged. Now, the state cannot even keep its public beach campgrounds open. Much like the streets of San Francisco, too many people have defecated on them.
Many longtime residents have fled the once-prosperous Golden State.
In sum, no one understands risk better than insurance companies — and the nation’s largest provider of home insurance has decided that beautiful, resource-rich California presents too much risk.
Liberalism can destroy anything.
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