Two of California’s largest insurance providers have ceased offering new coverage to property owners in the nation’s most populous state. Politicians, the press, and corporate spokesmen eager to protect their Wall Street “environmental, social, and governance” (ESG) scores are blaming climate change, but the true culprit is incompetent governance.
Allstate joined State Farm last week to discontinue applications for new property coverage in California, which has been ravaged by wildfires that have consumed entire communities. Last month, State Farm, which insures more property in California than any other company, declared a halt to new policies, citing “historic increases in construction costs” combined with “rapidly growing catastrophe exposure.” Allstate, California’s fourth-largest property and casualty insurance provider, quietly did the same, according to the San Francisco Chronicle on Thursday.
“The pause began last year but appeared to receive only a passing mention in industry publications,” the Chronicle reported. That Allstate and State Farm are ceasing coverage on the West Coast “signals that insurance woes in the state may be more severe than the public is aware of.”
The two insurance giants cover more than 13 percent of California’s property and casualty market share. Allstate told the Chronicle the firm paused new policies “so we can continue to protect current customers.”
Residents in fire-prone areas have already struggled to guarantee home insurance from companies wary of the potential wildfires that set the state ablaze every year. High-end insurers AIG and Chubb pulled back coverage in California last year, citing fire risk.
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