California (Thechieftainspear) – California Insurance Commissioner Ricardo Lara has given provisional approval for State Farm General’s request to raise homeowners’ insurance rates by 22%, citing the insurer’s financial strain following recent wildfires in Los Angeles County.
State Farm, the largest provider of home insurance in California, argues that the catastrophic fires have put the company in a precarious financial position. However, final approval of the rate hike will depend on a public hearing set for April 8, 2025, where the company must present data supporting its request.
“This decision is not final,” Lara emphasized in a statement on Friday. “State Farm must demonstrate the necessity of this increase through a transparent, public process.”
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The announcement follows a pivotal meeting at the Department of Insurance’s Oakland office on February 26, where State Farm disclosed that while it remains capable of covering wildfire-related claims, the overall financial impact has been severe.
In addition to conditionally approving the rate hike, Lara urged the company to stop policy non-renewals and secure a $500 million capital infusion from its parent company to strengthen its financial stability.
This move comes after Lara initially rejected the insurer’s request in February, stating that the company had not sufficiently justified the increase. The proposal, if fully approved, would impact homeowners and rental property owners differently:
- Non-Tenant Homeowners: 22% increase
- Tenants (Renters): 15% increase
- Condominium Unitowners: 15% increase
- Rental Dwelling Coverage: 38% increase
State Farm General has already received over 8,700 claims related to the wildfires and has paid out more than $1 billion in damages, with expectations that the total payout will continue to rise.
“The cost of insurance is increasing in California because the risks have grown,” the company stated. “For the system to remain sustainable, pricing must accurately reflect the level of risk.”
Lara stressed that the decision to grant provisional approval is part of a broader effort to stabilize the state’s insurance market and protect policyholders amid ongoing challenges in the industry .
