State Farm General, California’s largest fire insurance provider, has submitted an urgent request for a 22% interim rate increase for homeowners to the state’s insurance commissioner. The company cites a severe financial strain following recent wildfires in Los Angeles, which have led to over 8,700 claims and more than $1 billion in payouts. State Farm argues that the rate hike is essential to maintain its ability to pay future claims and stabilize the insurance market in California.
The California Insurance Commission has acknowledged the urgency of the request but expressed concerns about State Farm’s financial status. The commission plans to address the request promptly.
California homeowners already bear some of the nation’s highest insurance costs due to wildfire risks, which have led insurers to reassess their coverage strategies in the state. As a result, some homeowners are left with limited options, such as the more expensive and less comprehensive California FAIR plan.
State Farm General is a subsidiary of State Farm Mutual Automobile Insurance Company, covering over 2.8 million policies in California. The company reports that its surplus for claims is significantly reduced, partly due to natural disaster payouts. It has pending applications for rate increases but insists that an interim hike is necessary to sustain its claims-paying capabilities.
Carmen Balber of Consumer Watchdog criticized the rate hike request, suggesting it exploits the disaster situation to benefit the company financially at the expense of homeowners. Meanwhile, State Farm has been retreating from the California market, ceasing new policy issuance and not renewing some existing policies. Recent state regulations have temporarily halted insurers from canceling or not renewing policies in wildfire-affected areas, further complicating the situation for both insurers and homeowners.
