State Farm General is seeking to significantly raise insurance rates in a move being questioned by California Insurance Commissioner Ricardo Lara.
The insurer has applied for a 30% rate hike for homeowners; 36% for condo owners; and 52% for renters. It was noted that, if approved, the increase would be the most substantial for the company over a seven-year period.
For Lara, the request could be an indication of the firm’s current standing.
The insurance commissioner was quoted as saying: “State Farm General’s latest rate filings raise serious questions about its financial condition.
“This has the potential to affect millions of California consumers and the integrity of our residential property insurance market.”
Additionally, Lara’s camp is said to be keen to “get to the bottom” of the company’s financial position and will conduct an extensive review before deciding on the applications.
Earlier this year, the insurer announced that approximately 30,000 homeowners’, rental dwelling, and other property insurance policies would not be renewed as part of its partial pullout from the California market. Around 42,000 commercial apartment policies also faced non-renewal.
At the time, State Farm General cited “some difficult but necessary decisions” that had to be made to remain sustainable in the state.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” the firm noted in March.
This time around, it said: “Rate changes are driven by increased costs and risks and are necessary for State Farm General to deliver on the promises the company makes every day to its customers. We continue to look for ways to maintain competitive rates.”
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