(KRON) — One of California’s top property insurers is asking for a double-digit rate hike in the wake of the Southern California wildfires.
Less than a month after the Palisades and Eaton fires broke out in Southern California, State Farm Insurance said it’s received more than 8,700 claims and has already paid over $1 billion to customers. But with many more payouts to go, State Farm has sent a letter to the state insurance commissioner, asking for an interim rate hike “to help avert a dire situation for our customers and the insurance market in the State of California.”
Rex Frazier is president of the Personal Insurance Federation of California, a trade association representing California’s largest property insurers, including State Farm.
“I think this request would have come regardless of Southern California fires,” said Frazier. “This is an issue that’s built up over a long period of time and is not going to be resolved quickly. We have a system that has made it difficult for companies to be at rates that allow them to ensure in the highest risk areas.”
Frazier said insurance companies are now playing catchup and to remain solvent, they are asking for these major increases. In State Farm’s case, they are asking for a 22 percent increase for homeowners, a 15 percent hike for condominium owners, and a 38 percent increase for rental dwellings. Frazier said not allowing the hikes will send more people to the state’s California Fair Access to Insurance Requirements (FAIR) Plan.
Frazier said, “It’s grim. That means that more and more people will have a harder and harder time finding insurance from a company that they recognize that’s financially stable and able to protect them when the worst happens, and more and more people go to the FAIR plan where nobody should want to be.”
In a statement, the California Insurance Commissioner’s office provided the following statement to KRON4 News:
State Farm General’s rate filings raise serious questions about its financial condition. State Farm General continues to collect insurance premiums paid by Californians and pay out claims to its existing customers. There is no law or regulation that prevents an insurance company from continuing to bill customers for premiums in a wildfire emergency. The Commissioner’s moratorium authority only applies to cancellations and non-renewals. To protect millions of California consumers and the integrity of our residential property insurance market, the Department will respond with urgency and transparency to recommend a course of action for Commissioner Lara. The Department will investigate these rate applications thoroughly to ensure Californians are charged the appropriate justified rates as required under Proposition 103.
Gabriel Sanchez, Press Secretary, California Department of Insurance
State Farm’s requested rate hikes would go into effect May 1 if approved.
(KRON) — One of California’s top property insurers is asking for a double-digit rate hike in the wake of the Southern California wildfires. Less than a month after the Palisades and Eaton fires broke out in Southern California, State Farm Insurance said it’s received more than 8,700 claims and has already paid over $1 billion […]
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