Michael L. Tipsord Chairman, President and Chief Executive Officer | State Farm, IL
Bloomington, IL, March 20, 2024 — State Farm General Insurance Company, in an effort to ensure its long-term sustainability in California, has announced some significant changes that will affect a portion of its policyholders in the state.
The company revealed that approximately 30,000 homeowners, rental dwelling, and other property insurance policies will not be renewed. Additionally, around 42,000 commercial apartment policies will also not be renewed. It is important to note that renters insurance will not be impacted by these decisions.
These actions, specific to California, will be implemented on a rolling basis over the next year, starting on July 3, 2024, for certain policies and on August 20, 2024, for commercial apartment policies. Together, these policies represent just over 2% of State Farm General's policy count in California.
State Farm General emphasized that these decisions were not taken lightly and were the result of a thorough assessment of the company's financial health. Factors such as inflation, catastrophe exposure, reinsurance costs, and outdated insurance regulations played a role in these determinations.
The company expressed its commitment to maintaining adequate claims-paying capacity for customers and complying with financial solvency laws. State Farm General acknowledged the proposed regulatory reforms by the Insurance Commissioner and pledged to collaborate with relevant authorities to pursue these reforms for a more risk-aligned insurance environment.
State Farm General will notify affected customers ahead of their policy expiration to provide information on alternative coverage options. The company's independent contractor agents in California will continue to service policies not impacted by these changes. Furthermore, State Farm General's previous decision regarding new applications, made in May 2023, remains unchanged, with ongoing evaluations based on market conditions.
In conclusion, State Farm General Insurance Company is taking necessary steps to navigate the evolving landscape in California while prioritizing the well-being of its policyholders and ensuring its own financial sustainability.