California Insurance Commissioner Ricardo Lara has provisionally accepted State Farm General’s request for an emergency 22% rate hike.
State Farm, the state’s largest home insurer, made this request due to the company’s “dire” financial situation after the deadly and destructive Los Angeles County wildfires.
In a statement released on Friday, Lara said this request will be fully approved “only if the company can justify it with data in a public hearing scheduled for April 8, 2025.”
“Commissioner Lara’s actions follow an unprecedented meeting at the Department of Insurance’s Oakland office on February 26, 2025,” said Lara’s statement. “During this meeting, State Farm informed the Commissioner that while it can cover claims from the Southern California wildfires, the disaster has worsened its financial condition.”
In addition to provisionally accepting the company’s request, Lara called on State Farm to halt non-renewals and to ask for a $500 million capital infusion from its parent company to help stabilize finances.
Friday’s announcement comes a month after Lara first rejected the request, claiming State Farm had not met the burden of proof.
”In the request, State Farm seeks an increase for the following, effective May 1, 2025: 22% for Non-Tenant homeowners, 15% for Tenants (Renters), 15% for Tenants (Condominium Unitowners), and 38% for Rental Dwelling,” Lara explained in a letter released when he initially denied the request in February.
State Farm General shared that it has already received over 8,700 claims, has paid out over $1 billion to customers, and expects to pay out “significantly more,” with the fires being one of the costliest natural disasters in its history.
“Insurance will cost more for customers in California going forward because the risk is greater in California,” a statement from the company said. “We must appropriately match price to risk. That is foundational to how insurance works.”
Lara said that his decision to provisionally accept the request is in an effort to “safeguard Californians during the ongoing insurance crisis and stabilize the market.”
