State Farm Seeks an Urgent Increase in California Rates After Fires
The New York Times
The company asked state regulators to approve a 22 percent increase on average.
State Farm, the largest homeowners’ insurance company in California, asked state insurance regulators on Monday to urgently approve a 22 percent average rate increase, a worrying sign for an already fragile insurance market in a disaster-prone state.
In recent years, more Californians have struggled to secure affordable homeowners’ insurance as companies have raised their rates or pulled out of the market altogether as fires and other disasters have become more destructive. Last month’s blazes in the Los Angeles region, which destroyed 12,000 homes, have only heightened those concerns as people have weighed whether to rebuild.
State Farm has received more than 8,700 claims from the Los Angeles fires alone and paid more than $1 billion to customers, according to the company. The insurer expects to pay out significantly more, and the fires will be the costliest in the history of State Farm, the company said.
State Farm General, which insures more than one million homeowners in California, is operated separately from affiliates that provide auto and life coverage. The company asked state regulators to approve the rate increases on renewals starting in May.
“Insurance will cost more for customers in California going forward because the risk is greater in California,” the company said in a statement on Monday. “We must appropriately match price to risk. That is foundational to how insurance works.”
The insurance commissioner’s office said that it would review State Farm’s rate increase application. The company already had three pending rate increase filings with the department.
