Sacramento: State Farm, California’s largest private insurer, has requested an emergency rate increase from state regulators to help offset mounting claims from devastating wildfires that swept through Los Angeles last month.
The company is seeking rate hikes of up to 22% for non-tenant homeowners, 15% for renters and condominium owners, and as much as 38% for rental dwellings. Non-tenant homeowners refer to investors who own properties but do not reside in them.
A spokesperson for the state’s insurance regulator confirmed to Reuters via email that these rate-increase applications will undergo thorough review.
State Farm currently insures approximately 250,000 homes and 880,000 automobiles in Los Angeles County, according to its website. Statewide, it covers more than a million homes and over four million automobiles, representing billions of dollars in risk exposure.
In recent years, the growing threat of frequent and severe wildfires has driven several insurers out of the California market, leaving homeowners with limited options, including turning to the state’s costlier insurance program. The wildfires in Los Angeles last month claimed 28 lives and damaged or destroyed over 16,000 structures.
“SFG needs your urgent assistance in the form of emergency interim approval of additional rate to help avert a dire situation for our customers and the insurance market in the state of California,” the company stated in its filing to regulators.
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The filing also revealed that, as of February 1, State Farm had received over 8,700 claims and had already paid out more than $1 billion in settlements.
Over a nine-year period ending in 2024, State Farm reported that it paid $1.26 in claims and expenses for every $1.00 collected in premiums, leading to cumulative underwriting losses exceeding $5 billion. The company’s after-tax net loss over this period amounted to $2.8 billion.
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“The Department will investigate these rate applications thoroughly to ensure Californians are charged the appropriate justified rates,” a spokesperson for the regulator said.
The regulator’s spokesperson also noted that State Farm’s filings raise serious questions about the company’s financial condition.
