Months after wildfires devastated Los Angeles, insurance giant State Farm submitted a request to hike rates for all of its California customers.
If approved by insurance regulators, there would be a 22% increase for homeowners, a 15% increase for renters and condos, and a 38% increase for rental dwellings, according to a report from affiliate FOX 11 Los Angeles.
In a hearing on Tuesday, State Farm went before the California Department of Insurance to explain with data why the $921 million premium increase is necessary, FOX 11 reported.
STATE FARM EXECUTIVE FIRED OVER COMMENTS ON PREMIUM HIKES AFTER CALIFORNIA WILDFIRE
“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 ASKS CALIFORNIA TO APPROVE RATE HIKES AFTER WILDFIRE
State Farm raised rates in March 2024 and applied for another increase in June 2024.
Consumer Watchdog, a nonprofit organization that advocates for taxpayer and consumer interests, said at the hearing State Farm did not provide the minimum amount of data required by law to justify the increase, according to the report.
“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,” Consumer Watchdog said at the hearing.
State Farm said if the emergent decision is later overturned by the Insurance Department, it would refund its customers.
Following a judge’s ruling, Insurance Commissioner Ricardo Lara will make a decision on the emergency increase.
AMERICANS’ INSURANCE RATES ARE SOARING AND LAWSUITS PLAY A SIGNIFICANT ROLE
State Farm’s vice president for innovation and venture capital, Haden Kirkpatrick, was fired in March after a video of him making remarks about premium increases in response to recent wildfires surfaced online.
“Our people look at this and say, ‘S—, we’ve got like maybe $5 billion that we’re short if something happens.’ We’ll go to the Department of Insurance and say, ‘We’re overexposed here, you have to let us catch up our [rates].’… He’ll say ‘Nah.’ And we’ll say, ‘OK, then we are going to cancel these policies,'” Kirkpatrick said in the video.
State Farm told FOX Business at the time, “any characterization of State Farm General’s communications in connection with our rate request as ‘manipulation’ of the rate process or of the public is false. This person was never involved in or had any responsibility for business decisions related to State Farm General or its California operations, including anything to do with our pending rate applications or the emergency interim rate request.”
State Farm did not immediately respond to FOX Business’ request for comment.
FOX Business’ Eric Revell contributed to this report.
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