On Friday, California’s insurance commissioner declined a request for a 22% home insurance fee emergency from a 22% wildfire emergency in Los Angeles.
Commissioner Ricardo Lara said the state’s largest home insurance company failed to prove that an increase was needed.
“My goal is to make sure policyholders don’t have to pay more than they need to. In light of recent Los Angeles wildfires, state farm customers say why they want to pay more. “We need real answers on whether we are and what responsibility our company leadership is taking on to get a financial home in an orderly manner,” he posted to the state farm. On the health department website written by letter.
Insurance companies are seeking an emergency rate hike earlier this month, with rental housing demanding a 38% increase and tenants and condominium owners seeking a 15% increase. Capital is due to fire costs as it awaits decision regarding an outstanding request for fee increases filed last year.
The insurance company, a subsidiary of Mutual Automobile Insurance Co., a state farm in Bloomington, Illinois, said it has already received at least 8,700 claims and has paid more than $1 billion to its customers. S&P Capital IQ estimates the total losses will be $6.5 billion before reinsurance payments.
“We spent quite a bit of time trying to clearly answer questions outlined by the commissioner, the state farm general said Friday.
Last March, the company announced it would not update its real estate policy for its 72,000 homes, apartments and other California homes. It followed the May 2023 decision to halt the creation of new businesses, homeowners and other personal property and victim insurance in the state, except for personal auto policy.
Then last June, State Farm called for a 30% rate increase for homeowner policies and other rate hikes that have not yet been decided. The request surprised state officials, saying that Lara had raised “serious questions about her financial position” at the time.
State Farm said it doesn’t need to “further limit” the company’s ability to provide home insurance in the state as it requires the latest urgent demands to rebuild its capital base. Insurance industry rating agencies say they expect increased premiums due to fires.
The insurance company said it has lost $2.8 billion over the past nine years, including profits from investment revenue. He also said State Farm General’s financial rating was downgraded last year by AM Best. However, the state farm group, led by the parent company of the state farm general, was given an excellent financial rating in December by the rating agency.
In his letter, Lara said that he would give further documents justifying rate demands on the state farm, further information on the deterioration of its suspected financial condition, and that state mutual mutual support for its California subsidiary. I asked them to provide an explanation as to why they were unable to provide it.
He asked for a meeting with state farms on February 26, addressing the issue that was attended by Consumer Watchdog, a Los Angeles advocacy group that intervened in rate reviews, urging Lara to refuse to raise fees. . The group took a complicated response to Lala’s decision.
“We agree that we need to provide more information, but we need to do that with a formal hearing process with the right to discover and the right to investigate state farm books and experts,” the group said. said Jamie Court, president of the company. “We don’t think he has the right to grant a provisional rate hike in the event that there is no formal hearing.”
State Farm says it is ready to give a refund to customers paying the interim emergency fee if it approves a low rate increase requested last year. The company previously received a bump of 6.9% homeownership rate in January 2023 and a 20% hike that came into effect last March.
In 2023, the state farm general, which has a share of about 20% of the homeowners insurance market, guarantees about 1 million homeowners in the state and has 1.8 million other insurance contracts.
The January 7th fire has rocked the state’s insurance market, which has already been troubled by a series of large wildfires within the last decade, but nothing more devastating than LA Fires, and insurance is The company is projected to cost $45 billion.
On Friday, the Department of Insurance announced a package of fire-related bills written by multiple lawmakers. It includes laws that provide tax-free subsidies to residents to make homes more fire-resistant, requiring insurance companies to pay fire claims without a detailed inventory list and submit claims to insurers. A 15% cap on the fees of public adjusters employed by policyholders must be established.
Another bill would give the commissioner the authority to issue a suspension that bans insurers and prohibits cancellation of policies for businesses and other policyholders after a major fire. It would expand the power already in force due to the homeowner’s policies that Lala exercised following La Fires.
Source link
