California Insurance Commissioner Ricardo Lara has conditionally approved State Farm’s request for an emergency interim rate increase following recent destructive wildfires in Los Angeles, provided the company can substantiate the need with data during a public hearing set for April 8, 2025.
State Farm submitted its request in a letter to Commissioner Lara on March 11, 2025, emphasising the need to protect the public’s interests after months of informal discussions with the Department of Insurance staff.
“We strongly believe this is best achieved by emergency approval of an interim rate, which indicates to providers of capital and rating agencies that there is a path for State Farm General (SFG) and the larger homeowners market toward a sustainable future even in the face of recent catastrophes,” State Farm said in the letter.
As of March 11, the firm noted that it has received more than 12,000 total fire and auto claims related to the January 2025 fires and has paid over $2.2 billion to its customers.
Total industry losses for wildfires are coalescing around the $40 billion mark, although some have suggested the total loss could be as high as $50 billion, while economic losses are expected to exceed $250 billion by some margin.
Now, in conjunction with the conditional approval of State Farm’s request for an emergency interim rate increase, Commissioner Lara has urged the company to suspend non-renewals and seek a $500 million capital infusion from its parent company to restore financial stability.
Commissioner Lara commented, “The role of the Insurance Commissioner involves balancing a stable and sustainable insurance market that serves consumers with effective oversight. To ensure long-term choices for Californians, I had to make an unprecedented decision in the short term.
“State Farm claims it is committed to its California customers and aims to restore financial stability. I expect both State Farm and its parent company to meet their responsibilities and not shift the burden entirely onto their customers. The facts will be revealed in an open, transparent hearing.
“Currently, too many Californians live in fear of having their insurance policies non-renewed. This anxiety perpetuates misinformation and discourages consumers from accessing their entitled benefits. This situation is unacceptable. I will remain vigilant in ensuring that State Farm processes claims fairly, fully, and promptly, and stands by its California customers.”
He continued, “To resolve this matter, I am ordering State Farm to respond to questions in an official hearing, promoting transparency and a path forward. It is evident that other California insurers are unable to absorb State Farm’s existing customers, which poses a significant risk of these customers ending up on the FAIR Plan—a scenario we all wish to avoid as my Sustainable Insurance Strategy is implemented.
“We will finally get to the bottom of State Farm’s financial condition. I am confident that my approach will provide Californians with greater choices in a competitive and stable insurance market – exactly what they deserve.”
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