State Farm Insurance Company announced that it will no longer serve new customers in California for business and personal home coverage, CNBC reports. State Farm cited the rising home costs and the uncontrolled wildfires as the culprits for its withdrawal from the state. California remains the most populated and richest state in the nation and would rank 5th largest GDP worldwide if it were an independent nation.
All State withdrawing from such a large market comprising 15% of the nation’s GDP is a dramatic decision. Although it has not cited California’s business unfriendly policies, this has been a reason for the major emigration of Californians to other states in the nation. California’s huge market share has had effects on companies operating outside its state, forcing them to comply with uniquely stringent regulations to maintain their presence in the state. All State’s abandoning California rather than complying with its unfriendly business climate could signify a shift in the economy.
This decision of companies not conducting business in certain parts of the country can be seen as part of a trend of balkanizing markets that various Supreme Court Justices feared would happen such as in the pork regulation dispute that came to the court last year.
Happy to hear State Farm has good sense. Its move should affect rates favoring their customers. California’s liberal behavior is disgusting and detrimental for its citizens and businesses!