Allstate Joined State Farm this week in announcing the company will no longer offer new homeowner insurance policies in California, according to published reports.

The reasons cited by the company for leaving California included state regulation, inflation, high costs to rebuild in the state and increased exposure to catastrophes, according to an article by Business Insider.

The company quietly stopped issuing new policies months ago before finally announcing the decision last week, the article said, citing a report by CBS News.

The California Department of Insurance (CDI) said in a statement that current Allstate and State Farm policyholders will not lose their existing policies.

While homeowners may see an increase in premiums, it will be limited by the price controls CDI has implemented to prevent insurers from raising prices to meet surging costs without the regulator’s written approval—another reason insurers are packing up their tents, critics say.

What is clear is that insurers have become increasingly reluctant to insure homes, condos and townhouses in California. Part of it is the fact that an estimated 4.5 million homes in the state are at high risk of wildfire and scientists expect California’s wildfires to grow in number and severity.

Allstate’s decision comes on the heels of State Farm’s moratorium on new policies late last month. Allstate said it would “cease accepting new applications,” including all business and personal lines of property and casualty insurance.

"State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market," the insurer said in a statement.

“We pledge to work constructively with the 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 said.

"The factors driving State Farm’s decision are beyond our control, including climate change," the California Department of Insurance said in response.

A 2020 ProPublica article, however, pointed out that California officials themselves have turned the state into a “tinderbox” through years of fire suppression on the huge swaths of land the state owns.

“The pattern is a form of insanity,” ProPublica wrote. “We keep doing overzealous fire suppression across California landscapes where the fire poses little risk to people and structures.”

As a result, “wildland fuels keep building up. At the same time, the climate grows hotter and drier. Then, boom: the inevitable. The wind blows down a power line, or lightning strikes dry grass, and an inferno ensues,” the article said.

Myriad experts have noted that California’s suppression practice contrasts sharply with approaches in the Southeast, where fire is accepted as a land management tool and millions of acres are allowed to burn each year.

Allstate’s and State Farm’s moratorium on new homeowners’ policies follows similar decisions by American International Group and Liberty Mutual to stop offering home insurance in the state and comes just as wildfire season kicks off in California.

Allstate did not immediately respond to a request for comment.