Insuring California and Florida: Challenges and Controversies.

State Farm's decision to stop writing new homeowners insurance policies in California has raised concerns about a looming insurance market collapse in the state. While the company cited rising construction costs, growing catastrophic exposure, and a challenging reinsurance market as reasons for the move, some suspect other factors may be at play, such as political pressure or staying on the right side of financial regulations. The insurance industry argues that California's rate regulation is forcing companies to underprice policies relative to their risk for potential payout. However, consumer advocates remain skeptical and point to the industry's 35-year campaign to escape the requirements of Proposition 103.