California Insurance Commissioner Ricardo Lara has announced that he will make a final decision on an emergency rate hike for State Farm’s home insurance policies in April, with the company seeking to raise rates by 22% to help rebuild its capital following the devastating Los Angeles wildfires.
The insurer aims to prevent a “dire” financial situation that could push homeowners into the state’s last-resort insurance option. However, Lara expressed concerns about the impact on consumers and demanded more data on State Farm’s finances and risk management practices before making a decision.
State Farm has already struggled financially, with its surplus account declining by $5 billion over the past decade and receiving a financial rating downgrade last year. The company estimates that the LA wildfires have caused losses of over $7 billion, and it is using its surplus and reinsurance to settle claims.
If approved, the emergency rate hike would affect approximately 1 million customers in California, with an additional $600 per year for homeowners. Consumer Watchdog, a consumer advocacy group, has opposed State Farm’s request and vowed to challenge any approval by Lara if he goes through with it.
Source: https://abc7.com/post/california-regulator-approve-state-farms-22-home-insurance-rate-hike-catch/16022588