Insurance Archives – Forest Fire Today
Insurance Archives – Forest Fire Today

State Farm Insurance will drop coverage for 72,000 California homes and condos this summer. California’s largest insurer, which is based in Illinois, cited a spike in costs, the increasing risk of forest fires and other disasters, and outdated regulations for its refusal to renew policies on 30,000 houses and 42,000 apartments, according to CBS News.

“State Farm General takes seriously our responsibility to maintain adequate capacity to pay claims for our customers and to comply with applicable financial solvency laws,” the company said. “It’s necessary to take these actions now.” California’s insurance commissioner has launched a year-long review of home insurance regulations aimed at reassuring the collapsing market of the state giving insurers more freedom to raise premiums while extracting commitments from them to extend coverage in fire risk areas. The California Department of Insurance said State Farm will have to answer questions from regulators about the decision.

Insurance Archives – Forest Fire Today
2018 Carr Fire — USFS photo by Brenna Jones

MyMotherlode reported that State Farm said it will work with Gov. Gavin Newsom and Insurance Commissioner Ricardo Lara to develop reforms that better align insurance rates with risk. CalMatters.org’s Levi Sumagasai explains this many California homeowners are just now finding their policies canceled — and hundreds of thousands more left with an expensive option of last resort — and for them, Commissioner Lara’s efforts to fix the market can’t come soon enough.

Lara introduced two basic rules to be followed. The first, introduced last month, will streamline rate reviews. State law gives the Insurance Department the power to approve or deny insurers’ requests for premium increases. Insurers complain that the process is holding back requested increases caused by the growing risks of climate change and inflation.

The second regulation would allow insurers to use catastrophe modeling — which combines historical data with projected risk and losses — along with other factors when setting their premiums. California is the last state to allow the modeling of this crash.

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *