California Department of Insurance Launches Probe into State Farm’s Wildfire Claims Handling
The California Department of Insurance (CDI) has launched an investigation into State Farm General Insurance Co.’s handling of claims stemming from the catastrophic Los Angeles wildfires in January. The inquiry focuses on “troubling” patterns in State Farm’s claims practices, including the frequent reassignment of multiple adjusters with little continuity in communication, inconsistent management of similar claims, and inadequate record-keeping or information-sharing among claims teams.
Insurance Commissioner Ricardo Lara initiated the investigation following reports of inconsistencies in State Farm General’s claims process after the record-setting wildfires. The CDI’s examination aims to ensure compliance with state regulations and protect policyholders who suffered significant losses.
State Farm General has received over 12,870 claims related to the Los Angeles wildfires, paying out more than $4.03 billion, with approximately 2,500 policyholders experiencing total losses. The insurer has undergone three market conduct exams by the CDI since 2014.
The CDI has a track record of intervening on behalf of policyholders, having recovered over $40 million for those affected by the Eaton and Palisades fires through formal consumer complaints. State Farm General currently holds a Best’s financial strength rating of B (Fair).
In response to the investigation, State Farm issued a statement asserting that regulators “routinely examine all insurance companies. These exams help ensure processes and procedures are in full compliance with state regulations. Our efforts will remain on serving all our customers and meeting our obligations under the contract while providing the necessary information to the CDI.”
