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tate Farm, the largest home insurer in California, plans to cut its policies by 1 million to stay financially stable. By the end of 2028, it expects to have less than 2 million policies statewide, down from 3.1 million at the end of last year. The company has stopped issuing new homeowner policies since May due to rising wildfire risks and construction costs, which are pushing its liabilities to the breaking point.

    State Farm is seeking a significant rate hike, with proposed increases of up to 52% for renters, 36% for condominium owners, and 30% for homeowners. This comes after raising rates by 20% in March. The company has also informed 72,000 policyholders that it will not renew their coverage starting in July.

    State Farm's plan includes both planned non-renewals and natural attrition as policyholders cancel or switch insurance providers. If the proposed rate hikes are approved, Consumer Watchdog executive director Carmen Balber warns that fewer people may cancel their policies. However, if the group is successful in blocking the rate hike, it could lead to more policy cancellations.

    The state Department of Insurance has proposed reforms to allow insurance companies to use catastrophe modeling when raising rates and pass on reinsurance costs to consumers. If approved, this could potentially attract new insurers to the market and increase competition. In the meantime, more homeowners are relying on the FAIR Plan, which offers wildfire coverage to those who can't get it elsewhere, with participants rising by 20% last year to over 350,000.