State Farm, the country’s largest insurer, has sent a letter to the California Department of Insurance warning of its ‘dire’ financial situation due to the Los Angeles County wildfires. The company is requesting an emergency 22% rate hike for homeowners, with additional increases of 15% and 38% proposed for condo owners and rental dwellings, respectively.
The insurer claims it has received over 8,700 claims and paid $1 billion in damages to Southern California customers. However, critics argue that State Farm refuses to provide proof of its financial struggles and instead delays responding to requests from consumer watchdog groups.
Consumer Watchdog’s Executive Director Carmen Balber stated that State Farm’s parent company has $135 billion in the bank and is not entitled to bailouts. Balber also accused the company of upstreaming billions of dollars to its parent company, effectively “stealing” money from California homeowners.
The proposed rate hike must be approved by the state’s Insurance Commissioner, Ricardo Lara. In response, Lara’s office has pledged to respond with urgency and transparency to recommend a course of action.
This proposal is not unprecedented, as State Farm was previously granted a 20% rate increase in March last year. If approved, this new hike would amend that decision, marking the second significant rate adjustment for the company in recent years.
Source: https://abc7.com/post/california-wildfires-state-farm-emergency-insurance-rate-increase-la-fires/15861614