Could an insurance company stop accepting homeowner applications in Oregon?
State Farm announced Friday it will no longer accept new applications for homeowner insurance, including business and personal lines property and casualty insurance, in California due to rising construction costs and the growing risk of catastrophes like wildfires in the state.
PORTLAND, Ore. (KOIN) – State Farm announced Friday it will no longer accept new applications for homeowner insurance, including business and personal lines property and casualty insurance, in California due to rising construction costs and the growing risk of catastrophes like wildfires in the state. However, at the moment, it doesn't look like there is a similar move in the works in Oregon.
The company shared the news in a press release posted online and said the change went into effect on May 27. The policy does not affect auto insurance.
“We pledge to work constructively with the CDI [California Department of Insurance] and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to improve the company’s financial strength,” State Farm wrote in the statement.
KOIN 6 News contacted State Farm to ask if the company planned to take similar action in Oregon. Public affairs employee Sevag Sarkissian, who covers all three West Coast states, did not respond to the question. Instead, he directed KOIN to the statement posted online about the change in California.
Jason Horton, a public information officer for the Oregon Division of Financial Regulation, which regulates insurance in the state, said so far, State Farm has not notified the division of any changes to their Oregon underwriting practices or acceptance of new business.
Nevertheless, he said there is no law in Oregon forbidding an insurance company from doing what State Farm is doing in California.
Another reason State Farm said it's halting homeowners insurance applications in California is the “challenging reinsurance market.”
According to the National Association of Insurance Commissioners, reinsurance is a tool insurance companies use to manage risks and the amount of capital they must have to support those risks.
In October 2022, California Insurance Commissioner Ricardo Lara began enforcing a first-in-the-nation wildfire safety regulation to help drive down the cost of insurance in the state. The law requires insurance companies to provide discounts to customers who follow the Safer from Wildfire framework to help protect their homes from catching fire during a wildfire.
Every action a person takes under the Safer from Wildfires program qualifies them for an insurance discount. Some of the steps include installing a Class-A fire rated roof, creating a five-foot ember resistant zone, enclosing eaves on a home, clearing vegetation and debris from under decks, and creating defensible space.
Lara also created a state law in 2018 that places a one-year moratorium on insurance companies and prevents them from canceling or not renewing home insurance properties in areas within or adjacent to a wildfire perimeter after the governor declares a state of emergency.
Oregon has not yet placed these requirements on insurance companies, but on May 8, Gov. Tina Kotek signed a bill that ensures insurance companies cannot use Oregon’s statewide wildfire risk map as a basis for canceling or refusing to renew policies, or for increasing premiums.
The bill also requires insurance companies to allow their insured clients at least two years to repair, rebuild or replace the property that was damaged or lost as a result of a wildfire that occurred during a declaration of a state of emergency.
In its statement, State Farm said it takes its responsibility to manage risk seriously.
“We will continue to evaluate our approach based on changing market conditions,” the company stated.
According to the Insurance Information Institute, State Farm is the number one homeowners insurance provider in California.