The insurer experienced a “significant” increase in catastrophic claims leading to the losses
Last year, State Farm insurance company recorded a $6.3 billion net loss partially due to what the insurer called a “significant” rise in home insurance damage claim severity.
As large as the loss was, it was smaller than what the insurer experienced in 2022
In 2022, the insurance company reported having lost a net $6.7 billion. Still, when State Farm made its announcement about 2023, it confirmed that it was “financially strong”, as its auto coverage’s net worth increased to $134.8 billion, a rise of $3.5 billion over the year before.
The insurer’s earned auto premium – that is, the amount paid by the policyholder – increased to $56.1 billion last year, up from $45.7 billion in 2022. At the same time, State Farm faced an auto underwriting loss of $9.7 billion. That was an improvement over the year before, as well, as it had been $13.4 billion in underwriting losses in 2022.
State Farm’s home policies brought in $30.5 billion in premiums in 2023, up from 2022’s $27.6 billion. That said, underwriting losses last year were $4.7 billion, when compared to $849 million in 2022.
Home policies make up 35 percent of State Farm’s premiums from property and casualty businesses, while auto represents 64 percent.
A state-specific approach
“While we improved overall auto lines profitability in 2023, our results remain below the level we expect and we’re taking a state-specific approach as we operate,” explained a prepared statement from Mark Schwamberger, State Farm Senior Vice President, Treasurer and Chief Financial Officer.
“Catastrophe losses were widespread in 2023, and our claims and operations team members, along with the State Farm independent contractor agents, responded throughout the year to help customers. State Farm Mutual Automobile Insurance Company remains financially strong, and it is that strength that allows us to handle uncertainty and serve more customers in more ways over the long term.”
Aligned with other insurance company results
These types of losses were common among other insurance company announcements for 2023. Many point to a rise in natural disasters such as wildfires and hurricanes, and an increase in the cost of repairs.
