California Insurance Commissioner Ricardo Lara has given his approval for an emergency rate hike for State Farm customers. The decision, made on Friday, follows a ruling by a Department of Insurance administrative law judge that allowed for a 17% interim rate hike for homeowners affected by the Los Angeles wildfires in January.
The rate increase, which was initially requested at 22%, will take effect on June 1. In addition to the 17% hike for homeowners, State Farm is also permitted to raise insurance rates for renters and condo unit owners by 15%, and landlord rental property insurance by 38%. As part of the agreement, State Farm will receive a $400 million cash infusion from its parent company to address its financial condition. The company has also agreed not to issue any block non-renewals through the end of the year.
Lara emphasized that dealing with the statewide insurance crisis “requires tough decisions.” He requested an independent review of the evidence by an administrative law judge to ensure fairness and transparency in the process. “Californians deserve a process grounded in fairness, transparency, and integrity — not politics or posturing,” Lara stated.
State Farm reported that as of May 12, they had paid over $3.51 billion and were handling more than 12,692 claims related to the wildfires. The company expressed gratitude for the commissioner’s approval and pledged to continue working towards a more sustainable insurance market in California.
A full-rate hearing is still to be scheduled to further examine the rate hike.
