California Insurance Commissioner Ricardo Lara, representative of the state’s farm general and consumer watchdog, a consumer advocacy group, met in person Wednesday to discuss the insurance company’s recent price hike request.
Insurance companies effectively seek 22% of non-tenant homeowners, 15% of tenants (renters), 15% of tenants (condominium unit owners), and 38% of rental housing on May 1st.
California’s largest insurance company, State Farm General, is asking the state’s Department of Insurance to “immediately approve a temporary rate hike to avoid the dire situation of more than 2.8 million policies.”
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Although Lala had already rejected the request on Valentine’s Day, after the meeting, the insurance secretary pointed out that he wanted to carefully reconsider reaching the decision in two weeks, Cal Batters reported.
“Calif. customers will be more expensive for future customers as they are at higher risk in California. Immediate emergency provisional approval of additional charges is essential to ensure that costs and risks are more closely aligned and allow general generals on state farms to rebuild capital. Prices must be properly matched to risk. That is the basis of the insurance mechanism,” the company said in a statement.
However, consumer watchdog argues that the company is “trying to bill customers, not because it can’t pay Wildfire’s claims, but because it wants to protect Wall Street’s credit rating.”
“However, as the letter states, S&P Global Rate uses State Farm and its parent company State Farm Mutual. Consumer Watchdog said in a news release:
State Farm’s latest rate hike demand follows the company’s request to raise 30% for homeowners, 36% for condominium owners and 52% for renters in June last year. That request is still pending.
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Lara has previously questioned the company’s financial situation, particularly after the June request to raise interest rates.
Since 2023, State Farm has not accepted new insurance applications for all business and personal property in California. Other companies have since announced similar moves.
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