By Stephen Hobbs, SACRAMENTO BEE
https://www.sacbee.com/news/politics-government/capitol-alert/article299975049.html
Insurance Commissioner Ricardo Lara said State Farm must answer more questions about its finances before the company can be approved for an emergency rate increase in response to the devastating fires in the Los Angeles area.
In a letter Friday, Lara requested a meeting later this month with company officials and representatives from a group challenging the request.
Executives for State Farm General Insurance Company, the firm’s California arm, asked Lara for a 22% price increase on Feb. 3. They told the commissioner their business “needs your urgent assistance in the form of emergency interim approval of additional rate to help avert a dire situation for our customers and the insurance market in the state.”
State Farm, which has long been California’s largest home insurer, received more than 8,700 claims related to the Los Angeles area fires as of Feb. 1 and had paid out over $1 billion, according to the letter. The company says it covers roughly 250,000 homes in Los Angeles County and more than 1 million in the state.
The wildfires, which began Jan. 7, are blamed for at least 29 deaths and displacing thousands of homeowners.
Spokesman Sevag Sarkissian said in a statement Friday that the company was disappointed in Lara’s decision.
“This lack of approval sends a strong message to State Farm General about the support it will receive to collect sufficient premiums in the future to protect Californians against the risk of loss to their homes.”
Even before the fires, the company had said it was facing financial challenges in California. In recent years, it and other insurers have stopped or restricted new business and not renewed policies.
Companies need Department of Insurance approval to increase rates for home and auto coverage — a process that can sometimes take more than a year. They have called for quicker action, saying the price hikes are needed, in part, because of growing risks of major fires.
State Farm in June asked the department to allow the company to raise its rates for homeowner policies by an average of 30% across California. That request is pending.
“My goal is to make sure policyholders do not have to pay more than is required,” Lara said in the letter.
He told State Farm that Consumer Watchdog would also be present at the Feb. 26 meeting.
The advocacy organization had challenged State Farm’s request. Attorneys for the group urged Lara and department staff to reject the recent emergency proposal, saying in recent letters that the company needed to provide more information to show why it should receive the immediate help.
“The Commissioner is right to call for more scrutiny of State Farm, which has so far stonewalled information requests,” Pam Pressley, an attorney for the organization, said in a statement. Pressley called for a formal public hearing.
Michael Soller, a department spokesman, said it would be a closed meeting.
“This is for the parties to the rate application who have been called in at the Commissioner’s discretion as he is the ultimate decision maker.”
State Farm executives, when asking for the quick increase, said the company in 2016 had roughly four times more money available to pay claims in California than it did at the end of 2024.
During that time, policyholders and attorneys have also accused the company of improperly denying coverage for water damage as part of a larger effort to cut costs while boosting profits.
