California insurance commissioner Ricardo Lara has temporarily accepted the state farm general’s request for an emergency 22% interest rate hike.
State Farm, the state’s largest home insurance company, made the request because of the company’s “disastrous” financial situation after a fatal and devastating Los Angeles County wildfire.
In a statement released Friday, Lara said the request would be fully approved.
“Committee Lala’s actions follow an unprecedented meeting at the Department of Insurance’s Auckland office on February 26, 2025,” Lala’s statement said. “During this meeting, state farms can cover claims from Southern California wildfires, but the disaster has made its financial condition worse, and we told the commissioner.”
In addition to tentatively accepting the company’s demands, Lara has called on state farms to stop non-renewal and seek a capital injection of $500 million from the parent company to stabilize the finances.
The announcement on Friday came a month after Lara first rejected the request, claiming that the state farms had not met the burden of proof.
“Requests state farms are seeking an effective increase of 1 May 2025. 22% of non-tenant homeowners, 15% of tenants (renters), and 38% of tenants (condominium unit owners).
The state farm general has already received more than 8,700 bills, has paid over $1 billion to its customers, and is hoping to pay “a hugely more,” and expect the fire to be one of the most expensive natural disasters in its history.
“Calif. customers will be at greater risk in California, which means they will cost more to their future customers,” the company’s statement said. “You need to match prices properly with risk. That’s the basis for how insurance works.”
Lara said his decision to tentatively accept the demand was an effort to “protect Californians and stabilize the market during the ongoing insurance crisis.”
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