
California Insurance Commissioner Ricardo Lara "provisionally" granted State Farm's request Friday for an emergency 22% hike in its homeowner's insurance rate, pending further information at an April hearing.
The insurer
California's insurance market is facing significant challenges, Lara said at a meeting with the insurer, "due to the climate catastrophes, rising global reinsurance cost and a tightening national property insurance market."
The Golden State has been walloped by natural disasters including record flooding and wildfires over the past several years, which led to
Both California Gov. Gavin Newsom and Lara
Lara had
"The role of insurance commissioner involves balancing a stable and sustainable insurance market that serves consumers with effective oversight," Lara said. "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."
State Farm said in a statement the insurer is moving forward on implementing the provisionally approved rate; and will "continue to monitor capacity to support its risks and build sufficient capital for the future."
The insurance commissioner asked that State Farm halt non-renewals and pursue a $500 million capital infusion from its parent company, State Farm Mutual, to restore financial stability.
Lara made the request during a
He added that too many Californians are currently living in fear of not having their policies renewed.
"This anxiety perpetuates misinformation and discourages consumers from accessing their entitled benefits," Lara said. "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."
State Farm reached out to Lara directly in February requesting an emergency interim rate increase after months of discussions with Department of Insurance staff, Lara said.
State Farm told Lara while it can cover claims from the Southern California wildfires, the disaster has worsened its financial condition, he said.
Lara has pressed the state's largest home insurer for a plan to improve its financial standing and maintain its commitment to its more than 1 million California homeowner customers.
The hearing, slated for April 6, should help "get to the bottom of State Farm's financial condition," Lara said adding, he's confident his "approach will provide Californians with greater choices in a competitive and stable insurance market — exactly what they deserve."