California regulator mulls State Farm’s request for 22% premium hike for homeowners after LA fires

Sacramento, California (AP) – The best insurance organizations in California said on Friday that he will approve the emergency request by State Farm to collect 22 % on home insurance for about a million customers if the insurance giant can justify the rise in a general hearing.

The state’s largest insurance company in the state with nearly one million home insurance policies in California said that the emergency rate will help the company rebuild its capital in the wake of Los Angeles fires, which destroyed more than 16,000 buildings, most of them homes. The company is trying to prevent the “terrible” financial situation, which executive officials said can push homeowners to the last insurance option in the state.

California Insurance Commissioner Ricardo Lara said that other California insurance companies will not be able to accommodate state farm agents if the insurance giant stopped doing business in California, but he wanted more data on how to manage the company to its money and risk account. He asked the company to publicly present its argument on April 8 to a judge, who will then make a proposed decision. Lara and then make a final decision.

“Farm state claims to adhere to its customers in California and aim to restore financial stability. Lara said in a statement:“ I expect that the state of Farm and its mother company will meet its responsibilities and do not turn the full burden to its customers. ”The facts will be revealed in an open and transparent hearing.”

Lara also called on the company to request a $ 500 million capital pumping from her mother company to help install its financial resources at a private meeting this week, according to the meeting version.

At the same meeting, State Farm said it would stop cancellation and not renew policies for at least one year if he gets an increase in the approval rate. The company announced last year that it had stopped covering 72,000 homes and apartments in California after saying it would not issue new home policies in the state in 2023.

The Consumer Monitoring Authority, a consumer defense group that opposed the state’s request, said that the increase of 22 % may be equal to an additional $ 600 annually to homeowners. The group previously said that it would challenge approval if Lara passes through it.

State Farm and Consumer Watchdog did not respond immediately for suspension requests.

Emergency rates include an increase in a 22 % rate for homeowners, 38 % for rental owners and 15 % for tenants. They will enter into force in June if Lara finally agreed. The decision comes at a time when California is going through a period of years to lure insurance companies to continue doing business in the state, as forest fires are increasingly destroyed the entire neighborhoods. In 2023, many major companies, including State Farm, stopped issuing residential policies due to the high risk of fires. Lara revealed last year a list of regulations, all of which aim to give insurance companies more latitudes to raise premium installments in exchange for more policies in high -risk regions. These rules are a kick this year.