California’s insurance commissioner granted State Farm approval for an emergency 17 percent rate hike on Tuesday, after already authorizing a 20 percent increase last year.
Commissioner Ricardo Lara’s decision came after a judge concluded on the same day that the carrier — the biggest homeowner insurer in California — was in a weak financial position following the devastating wildfires that hit Los Angeles County in January.
The approval, which follows months of back and forth between the insurer and the commissioner, means that State Farm can raise premiums in California starting June 1.
Homeowners in the state can expect 17 percent rate hikes, while renters and condos will see an average 15 percent increase, and rental dwellings will face an average 38 percent rise.
Lara had initially seemed reluctant to approve State Farm’s emergency rate hikes, asking the company to prove its financial position following the wildfires. But the result of the independent review, run by administrative law judge Karl Frederic Seligman, convinced him that the rate hikes were needed.
“I am balancing all the facts. Protecting all State Farm customers and the integrity of our insurance market is an urgent matter,” Lara said in a statement on Tuesday.
“Let me be clear: We are in a statewide insurance crisis, affecting millions of Californians. Taking this on requires tough decisions. This is not a game. This is not a media-driven moment for some to exploit—this impacts people I am committed to protecting.”
The commissioner said he now expects State Farm to provide “the highest level of service to its California customers and to fulfill its promises.”
State Farm said earlier this year that it expected to pay $7 billion in claims related to the Los Angeles area wildfires. Many homeowners affected by the blazes recently said they were still struggling to get their claims paid by the carrier.
“State Farm must now justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my Department’s experts,” Lara said. “I am focused on ensuring that State Farm pays its claims to wildfire survivors fully and fairly—and nothing is off the table.”
This is a breaking story. More to follow.
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