CALIFORNIA – California Department of Insurance (CDI) commissioner Ricardo Lara rejected, February 14, State Farm’s emergency increase to insurance rates.
State Farm asked to raise rates 22% for homeowners, 15% for renters, 15% for condo owners, and 38% for landlords, effective May 1, 2025.
According to State Farm, it has received more than 8,700 claims and already paid more than $1 billion to customers for the recent wildfire disaster in Los Angeles County. The company says it will ultimately pay out significantly more, as collectively these fires will be the costliest disasters in the history of State Farm General.
Lara, however, said that according to Proposition 103, the burden is on State Farm to show why the rate increase is needed now.
“State Farm has not met its burden,” said Lara.
State Farm’s finances worsened despite years without major wildfire payouts
The company told CDI its finances had gotten much worse in 2022 and 2023, even though it hadn’t paid major wildfire claims for years.
“State Farm acknowledged it had limited writings for California consumers in areas at higher risk of wildfires for many years,” said Lara.
It stopped offering new policies in California in May 2023 and canceled 30,000 homeowners’ policies in March 2024, mostly in high-risk areas.
According to the commissioner, State Farm admitted in a March 2024 letter that raising rates alone probably wouldn’t be enough to fix its financial issues.
During this time, CDI approved several rate hikes for State Farm — 6.9% in November 2021, 6.9% in January 2023, and 20% in December 2023 for homeowners and condos.
Lara has asked State Farm to explain its financial troubles and rate hike proposal. Questions include:
- Why have finances worsened despite past rate hikes?
- Why is an emergency increase needed now?
- How will policyholders be impacted?
- Has the company provided enough evidence or sought help from its parent company?
State Farm is ‘very disappointed’
State Farm said it is ‘very disappointed’ that the commissioner ignored his department’s advice to approve its request for temporary rate increases.
“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,” the company said in a statement.
Lara has scheduled an in-person meeting with State Farm on February 26 where it can address his questions.
 commissioner Ricardo Lara rejected, February 14, State Farm’s emergency increase to insurance rates.){kind=link}