California Insurance Commissioner Ricardo Lara has rejected a rate hike request from State Farm General, citing the company’s “dire” financial situation following the devastating L.A. County wildfires. The proposed increase would have averaged 22% for Non-Tenant homeowners, 15% for Tenants (Renters), and 38% for Rental Dwelling.
State Farm has been hit hard by the recent natural disasters, with over 8,700 claims filed and $1 billion paid to customers. However, Consumer Watchdog has alleged that the company’s request is not about covering wildfire costs but rather protecting its Wall Street credit rating.
The Department of Insurance must approve rate increases for insurance companies, which can take more than a year to process. In this case, State Farm is seeking immediate approval to “align cost and risk more closely” and rebuild capital. However, Commissioner Lara has rejected the request, stating that State Farm has not met its burden in showing why the hikes are necessary.
This rejection follows previous questions from Commissioner Lara about State Farm’s financial situation, particularly after a failed rate hike request last June. The company has stopped accepting new insurance applications since 2023, and others have followed suit.
Source: https://ktla.com/news/california/insurance-commissioner-rejects-state-farms-emergency-rate-hike-request-calls-for-meeting-with-company-reps