By CAMILLE VON KAENEL, POLITICO
BILL COME DUE: Fire-shy insurers are cautiously returning to California — but it’ll cost you.
Take State Farm, the state’s largest insurer. It says it’ll avoid further nonrenewals this year if it can raise premiums by double digits. The promise — or threat, depending on how you look at it — is playing out in a multiday hearing starting today where State Farm and Consumer Watchdog are battling over a 22 percent emergency rate hike Insurance Commissioner Ricardo Lara approved provisionally last month after historic losses from the Los Angeles firestorms.
State Farm says it needs the hike to stay afloat, while consumer advocacy group Consumer Watchdog says the insurer should look to its parent company, not its customers, for the backup cash. It’s a microcosm of a wider fight over who pays that’s starting to play out as insurers show a willingness to cover California — for a cost.
Farmers, the second-largest insurer, has made the biggest splash about returning to the state, raising a 2023 cap on the number of policies it’ll write each month and expanding coverage to condos, renters, landlords and manufactured homes. The company cited an improved market under Lara’s new rules, in effect this year, that allow insurers to pass along more costs to customers. (It also got a 30 percent hike in business insurance and 7 percent in homeowners’ last year.)
To be sure, it’s not a full rebound. State Farm admits the emergency hike won’t be enough to restart new business in California. And Allstate’s CEO, Tom Wilson, said on a February earnings call the company has no plans to grow in the state anytime soon. “These things, they happen over a long time, and it takes a while for them to get fixed,” Wilson said. (That’s despite Allstate getting a 34 percent rate hike last year.)
Add to that the $500 million the state’s insurer of last resort, the FAIR Plan, will get to pass along to every policyholder in California to help cover its losses in the Los Angeles fires, and there’s a good chance your insurance bill is going up.