State Farm Won't Renew 72K Home Policies in California

State Farm will discontinue coverage for 72,000 houses and apartments in California starting this summer, the insurance giant said this week, nine months after announcing it would not issue new home policies in the state. The Illinois-based company, California's largest insurer, cited soaring costs, the increasing risk of catastrophes like wildfires, and outdated regulations as reasons it won't renew the policies on 30,000 houses and 42,000 apartments. More from the AP:

• The scale of the move: The company said the newly announced cancellations account for just over 2% of its California policies.
• Context: "State Farm is the last remaining company that has not non-renewed a single homeowners insurance policy since the big fires of 2017," Rex Frazier with the Personal Insurance Federation of California tells KRON4. "As the market leader, they really held on longer than anyone else."
• Key quote from State Farm: "This decision was not made lightly and only after careful analysis of State Farm General's financial health. ... State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our customers."
• Financial specifics: State Farm "outlined the drop in the capital that they have available to service their existing customers, and it went from $4.1 billion at the end of 2016 to $1.3 billion at the end of 2023," says Frazier.
• Impacted locations: KRON4 reports the most impacted zip codes are in areas with heightened wildfire risk, including Santa Rosa, parts of Napa, Piedmont, Orinda, and Lafayette.
• The bigger picture: The move comes as California's elected insurance commissioner undertakes a yearlong overhaul of home insurance regulations aimed at calming the state's imploding market by giving insurers more latitude to raise premiums while extracting commitments from them to extend coverage in fire-risk areas, the news group said.

(More State Farm stories.)