State Farm has already paid out over $1 billion to policyholders in response to more than 8,700 claims related to recent wildfires. However, in a letter addressed to California’s insurance commissioner, the company’s leadership acknowledged that the total payouts “will ultimately pay out significantly more.”
The company indicated that previous years’ losses attributed to natural disasters had already weakened its financial standing, resulting in a credit rating downgrade. Furthermore, State Farm warned that further downgrades could jeopardize the more than 2.8 million insurance policies held by Californians, if additional capital isn’t secured.
