Insurance giant State Farm is seeking California state officials to approve an emergency rate increase of 22% for homeowners in the state, effective May 1. The move comes after devastating fires in the Los Angeles area caused widespread destruction and resulted in over 8,700 claims worth around $1 billion.
State Farm expects to pay significantly more as the number of claims continues to rise, and a potential rate hike would allow the company to rebuild its capital base. The California Insurance Commission has promised to “urgently” respond to the request, which raises concerns about State Farm’s financial condition.
This is not the first time State Farm has requested rate hikes in California. In June 2024, the company asked for increases of 30% for homeowner policies, 36% for condo owners, and 52% for renters. However, it also cut new coverage in the state due to rising inflation, natural disasters, and reinsurance market challenges in May 2023.
Source: https://thehill.com/homenews/5124394-state-farm-emergency-rate-los-angeles-wildfires