State Farm insurance office. Photo: Diego M. Radzinschi/ALM
State Farm said it will recoup funds given to the California FAIR Plan from its policyholders.
Following the LA County Wildfires in January, California Insurance Commissioner Ricardo Lara approved a $1 billion FAIR Plan assessment levied to state insurers based on market share, with State Farm General’s assessment exceeding $165 million.
The state’s largest insurer will implement a temporary supplemental fee on personal and commercial policies including homeowners, renters and business lines in California to recoup at least half the costs associated with the FAIR plan.
“For Homeowners and Rental Dwelling policies, the fee is 1.13% each renewal for two renewal periods,” State Farm said. “For other personal lines policies, the fee is 2.25% for one renewal period. For commercial policies, the fee is 0.26% for one renewal period. Customers will begin to see the temporary supplemental fee on policy renewals effective Dec. 1, 2025, for personal lines and Jan. 1, 2026, for commercial lines.”
All insurer requests to recoup assessment costs must be filed and approved by the California Department of Insurance, according to State Farm. Commissioner Lara’s office has not responded to inquiries from PropertyCasualty360.com.
State Farm rocked by recent controversy:
In May, Commissioner Lara approved State Farm’s emergency 17% rate hike request after an administrative law judge ruled in favor of the carrier on May 13. The ruling stemmed from a three-day hearing in April and also required the company receive an immediate $400 million cash infusion from its parent company to address its serious financial condition after the wildfires in January.
Lara rejected the carrier’s initial request in February, saying the company had not shown why the increase was needed.
In August, California legislators representing Altadena-area fire victims asked Commissioner Lara to investigate State Farm’s market conduct and freeze any rate hikes until the fire victims are fully recovered. In September, State Farm announced a new workforce program that could mean layoffs in ‘limited scenarios.’
“These changes are part of our continued efforts to shape a stronger, more flexible organization for the future,” State Farm spokesperson Gina Morss-Fischer told PropertyCasualty360.com.
“Each business area will determine if, when, and how it will use the new program and process based on its needs,” she said. “We don’t have any actual or forecasted numbers to share with you at this time, and we do not anticipate involuntary exits outside of limited scenarios based on business area needs."
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