State Farm requests emergency rate hike for Californians
State Farm asking for another California rate hike
State Farm is asking to hike rates by 17-36% in California, potentially the second rate hike in a year.
LOS ANGELES - Another rate hike might be coming for State Farm customers. This is the insurance company's second request for a rate hike within the past year.
It will affect every State Farm customer, even if you're not impacted by the recent wildfires.
Public hearing held
What we know:
The California Department of Insurance held a hearing Tuesday to determine whether to approve State Farm's requested rate hike, which could increase premiums by as much as 38%.
During the hearing, State Farm was required to justify with data why the drastic $921 million rate hike is necessary.
"The interim rate is fundamentally fair, adequate, and reasonable as a response to one of the largest wildfire catastrophes in California history and is in the interest of justice because it will help prevent a ratings downgrade that would negatively impact hundreds of thousands of California homeowners," said State Farm attorney Kathrine Wellington.
State Farm's request
State Farm is seeking approval from insurance regulators for a 22% increase for homeowners, a 15% increase for renters and condos, and a 38% increase for rental dwellings.
State Farm calls its current request an emergency and would refund money to its customers if the request is ultimately overturned by the Insurance Department.
State Farm raised rates in March 2024 and applied to raise rates again in June 2024.
The other side:
Consumer Watchdog, a nonprofit consumer rights advocacy group, claims State Farm paid its parent company $3 billion in what's called re-insurance, calling that a way to pay the corporate balance sheet.
Consumer Watchdog also said the insurance company has failed to provide the minimum data required by law to prove the need for the increase.
"They wanted to rely on variances, they did not supply sufficient information as required by the variance, which requires among other things a plan to restore solvency and a plan to return excessive charges to policyholders," the group said at the public hearing.
The judge will issue a proposed decision, and Insurance Commissioner Ricardo Lara will have the final say.