Several months after wildfires impacted Los Angeles, State Farm, a major insurance company, has requested to increase rates for all its customers in California. According to a report by FOX 11 Los Angeles, if the insurance regulators approve the request, homeowners would see a 22% hike, renters and condo owners would experience a 15% rise, and rental dwelling rates would go up by 38%.
State Farm presented its case on Tuesday before the California Department of Insurance, arguing the necessity of a $921 million premium increase. According to State Farm attorney Kathrine Wellington, the proposed interim rates are deemed fair and necessary, in response to one of the most catastrophic wildfire events in California’s history. She claimed this measure is crucial to prevent a ratings downgrade affecting hundreds of thousands of California homeowners.
In March 2024, State Farm had already raised rates, and they filed for another increase in June of that year. However, Consumer Watchdog, an organization advocating for taxpayer and consumer rights, argued at the hearing that State Farm failed to supply the legally required data to support the increase.
Consumer Watchdog alleged that State Farm relied on variances without providing sufficient information, which includes a plan to restore solvency and a strategy to return excessive charges to policyholders. State Farm countered that if the Insurance Department later overturns the emergent decision, they would refund customers.
The decision on the emergency rate increase will be made by Insurance Commissioner Ricardo Lara following a judge’s ruling on the matter.
In a related incident, State Farm’s vice president for innovation and venture capital, Haden Kirkpatrick, was dismissed in March after a video of his comments on premium increases due to recent wildfires was leaked online. In the video, Kirkpatrick expressed concerns about being financially short in the event of a crisis and mentioned discussing the matter with the Insurance Department.
State Farm responded to FOX Business, stating that any allegations of manipulating the rate process or public would be inaccurate. They clarified that Kirkpatrick was not involved in business decisions regarding State Farm General or its California activities, including the pending rate applications or the emergency interim rate request.
State Farm has not yet provided further comments to FOX Business regarding this issue.
