State Farm General Insurance Company will stop accepting new applications for business and personal lines of property and casualty insurance today, the company announced in a press release Friday.
"State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market," the company said in its statement.
The change does not affect existing home insurance policy holders nor does it affect new personal auto insurance, the Wall Street Journal reported.
State Farm, one of California's biggest insurers, is the nation's biggest home insurer by premium volume, the outlet also reported.
The company recognized the wildfire loss mitigation efforts of Gov. Newsom's (D-Calif.) administration, legislators, and California's Department of Insurance in its statement, pledging to work with the CDI to "help build market capacity."
The Fortune 500 insurance giant says the move is necessary to "improve the company's financial strength."
Northern California's deputy insurance commissioner Michael Soller cited climate change as a factor driving the company's decision.
"The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation," Soller said in a statement following an interview with the Journal.
Soller told the outlet wildfire risk is among the Golden State's root causes of its insurance woes.
Soller pointed to wildfire-loss-mitigation efforts by the governor, lawmakers, and insurance regulators, including community fire-prevention grants and building fire breaks. He also told the outlet that the Golden State is starting an insurance discount program that takes consumers' efforts at wildfire-mitigation into account.
California's housing costs are among the highest in the country, and nationwide housing shortages have deepened California's homelessness crisis, Fox Business reported.
The state has spent $20 billion in the last five years to address homelessness, KUSI reported earlier this month.
Despite the sizable taxpayer outlay, the problem continues to worsen.
"There is a solution," said state Senate Minority Leader Brian Jones (R) in an interview with KUSI. Jones pointed to Texas's approach, citing a recent visit Houston. During his visit, he said he tried to find large compartments like those in California. Instead, he says he found only four tents and a handful of panhandlers.
He noted that Texas does not allow tent encampments and that they enforce the laws in the books when it comes to drug crimes, petty theft, and sexual assault.
"The government here in California ... have allowed these encampments ... we can't allow these conditions on our streets to continue," he added, calling for a compassionate approach to addressing the challenge.
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