State Farm General Insurance said it is “considering its options” in California after state insurance Commissioner Ricardo Lara (pictured) did not approve an emergency request for interim property rate increases.
“We are very disappointed,” State Farm said in a statement. “This lack of approval sends a strong message to State Farm General about the support it will receive to collect sufficient premiums in the future to protect Californians against the risk of loss to their homes, property and other claims.”
The company stated it is "positioned to handle all of the claims associated with the most recent wildfires" but must evaluate its position in the California insurance market.
In a Feb. 14 letter, Lara informed State Farm that the company had not met the burden of proof required for emergency property rate increases of 15% to 38%. He requested additional data and scheduled a meeting at the end of the month with the carrier and intervenor Consumer Watchdog.
State Farm said the commissioner did not follow his department’s recommendation to approve interim rate increases associated with a June filing that sought larger adjustments.
On Feb. 7, the California Department of Insurance submitted a proposed order recommending the commissioner approve temporary rates while awaiting a final decision following a rate hearing. Lara did not accept the recommendation, writing, "As the elected head of the department, my primary responsibility is to the people of California."
The interim rate request is related to State Farm General’s 2024 filing, which sought rate increases of 30% to 55% across four property lines by early 2025. Those requests were publicly challenged. The company previously said it needed immediate relief, including a 22% increase in homeowners rates, to address financial pressures affecting policyholders and the state’s insurance market.
Since State Farm submitted its request, Lara approved the California FAIR Plan’s $1 billion assessment on member insurers based on prior market share. Insurers may pass up to 50% of the assessment to policyholders through a temporary supplemental fee but cannot incorporate it into future rates.
State Farm reported more than $5 billion in cumulative underwriting losses over the past nine years, citing a misalignment between rates and risk. The company had received more than 8,700 claims related to the Los Angeles wildfires as of Feb. 1.
