State Farm General Insurance Company has responded to California Insurance Commissioner Ricardo Lara’s recent decision to deny their emergency interim rate request. The company’s statement comes in the wake of the commissioner’s ruling, highlighting the ongoing dialogue between the insurance provider and state regulatory authorities.
The statement is as follows:
“We are very disappointed the Commissioner ignored his department’s recommendation to take the critical and necessary step to approve State Farm General’s request for interim rate increases associated with our June 2024 filings.
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, property, and other claims
We have gone to great lengths to clearly answer the questions outlined by the Commissioner. While we’re positioned to handle all of the claims associated with the most recent wildfires, State Farm General must seriously consider its options within the California insurance market going forward.”
State Farm has requested interim rate increases from the California Department of Insurance, proposing an average 22 percent hike for homeowners. The insurance giant’s appeal follows a surge in claims stemming from Southern California’s devastating wildfires.
As of February 1, State Farm reported receiving over 8,700 claims related to the wildfires, having already disbursed more than $1 billion to affected customers. The company anticipates that this event will become the most expensive disaster in the history of State Farm General, with payouts expected to rise significantly.
State Farm highlighted a concerning trend over the past nine years where the gap between collected premiums and risk exposure has widened. For every dollar collected in premium, State Farm General has spent $1.26, leading to cumulative underwriting losses exceeding $5 billion. The insurer argues that this misalignment necessitates the proposed rate increase to stabilize its financial footing.
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