California Insurance Commissioner Ricardo Lara, representatives from State Farm General and Consumer Watchdog, a consumer advocacy group, met in person on Wednesday to discuss the insurance company’s recent price hike request.
The insurance company is seeking 22% for non-tenant homeowners, 15% for tenants (Renters), 15% for tenants (condominium unit owners), and 38% for rental dwellings, effective May 1.
State Farm General, California’s largest insurer, is asking the state’s Department of Insurance to “immediately approve interim rate increases to help avert a dire situation for the more than 2.8 million policies” issued by the company.
Lara already rejected the request on Valentine’s Day, but after the meeting, the insurance commissioner noted that he would carefully reconsider the request and hopes to reach a decision in two weeks, Cal Matters reported.
“Insurance will cost more for customers in California going forward because the risk is greater in California,” the company said in a statement. “Immediate emergency interim approval of additional rates is essential to align cost and risk more closely and enable State Farm General to rebuild capital. We must appropriately match price to risk. That is foundational to how insurance works.”
However, Consumer Watchdog has alleged that the company “seeks to charge customers more not because “it cannot pay wildfire claims, but because it wants to protect its Wall Street credit rating.”
“However, as the letter states, S&P Global rates State Farm and its parent company, State Farm Mutual, which has $194 billion in surplus and reserves, together,” Consumer Watchdog said in a news release. “They have an AA rating, the second-highest possible rating.”
State Farm’s latest rate hike request follows the company’s request to raise rates by 30% for homeowners, 36% for condo owners, and 52% for renters, on average, last June. That request is still pending.
Lara has previously questioned the company’s financial situation, especially after the June rate hike request.
Since 2023, State Farm hasn’t accepted new insurance applications for all business and personal property in California. Since then, other companies have announced similar moves.
