California Insurance Commissioner Ricardo Lara has approved a request by State Farm to raise home insurance premiums by an average of 22% on condition that the company agrees to certain conditions. The conditions include pausing cancellation and non-renewal of policies until the end of this year, providing $500 million to State Farm General, and presenting updated data to justify the rate increases.
Lara’s decision comes after State Farm requested “emergency” interim rate increases following wildfires in Los Angeles County last January, citing expected claims of over $7 billion. The company had requested a rate increase of 22% for homeowners, with additional hikes for renters and condos.
However, Lara has expressed concerns that large companies like State Farm often fail to disclose enough data to justify their requests for rate increases. He plans to hold a public hearing next month to determine if the rate hike is justified.
State Farm spokesperson Sevag Sarkissian said the provisional approval was a step in the right direction towards certainty in the California insurance market. However, Lara’s conditions aim to ensure that State Farm takes responsibility for its actions and does not burden consumers with cancellations and non-renewals.
The decision also follows an agreement by State Farm General to consider providing a capital infusion of at least $250 million to its California arm if the interim rate requests are approved.
Source: https://calmatters.org/economy/2025/03/state-farm-can-hike-insurance-premiums-with-conditions