State Farm insurance office. Photo: Diego M. Radzinschi/ALM
State Farm says its latest rate hike for rental dwellings, home and condo owners in California isn’t enough.
On May 14, the state’s Insurance Commissioner Ricardo Lara approved a 17% rate increase stemming from a three-day hearing in April. The company will also receive an immediate $400 million cash infusion from its parent company to address its serious financial condition.
“While we are pleased that Commissioner Lara approved the interim rate of 17%, this change only addressed part of the original request of 30% filed in June 2024,” State Farm said in a statement sent to PropertyCasualty360.com. “The overall request of 30% would not be on top of the 17% interim rate change. State Farm General is still pursuing the full rate request. A hearing on the full rate request is expected to be held this year.”
The financial crisis for State Farm began in wake of the LA County wildfires in January when the state’s largest home insurer requested an immediate 22% rate increase for homeowners, along with a 38% increase for rental dwellings and a 15% increase for renters and condo owners.
Commissioner Lara rejected the carrier’s request in February, saying the company had not shown why the increase was needed.
“We are in a statewide insurance crisis, affecting millions of Californians,” Lara said in a May 13, release. “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.”
“I expect State Farm to provide the highest level of service to its California customers and to fulfill its promises,” he added. “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.”
Currently, State Farm insures roughly 250,000 homes and 880,000 automobiles in LA County. The company insures over one million homes and more than four million autos across the state.
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