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State Farm Defends Emergency Rate Hike at Unprecedented California Hearing

The insurer seeks approval for steep premium increases, citing wildfire losses and financial instability, while consumer advocates challenge the justification.

Sisters Emilee and Natalee De Santiago sit together on the front porch of what remains of their home on January 19, 2025, in Altadena, California.
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Altadena Heritage Chair Hans Allhoff visits what was his mid-century home in Rubio Canyon in Altadena on Friday, Feb. 21, 2025. Allhoff and Altadena Heritage are advocating for more thought to go into community planning around the rebuild of their town centers destroyed in the Eaton fire. (Photo by Sarah Reingewirtz, Los Angeles Daily News/SCNG)
California Insurance Commissioner Ricardo Lara, seen here in Oakland in February, has granted State Farm preliminary approval to raise rates by 22% for homeowners. But the approval is conditional on the company justifying the price hike to an administrative law judge. 

Overview

  • State Farm has requested emergency rate hikes averaging 22% for homeowners, 15% for renters, and 38% for rental dwellings following $7.6 billion in wildfire claims.
  • The ongoing public hearing in Oakland, the first of its kind in nearly a decade, is scrutinizing the insurer's financial data and justification for the increases.
  • Consumer Watchdog and other intervenors argue State Farm has not provided sufficient data to support the rate hikes, raising concerns over transparency.
  • State Farm's surplus has dropped dramatically, from $4 billion in 2015 to a projected $600 million in 2025, prompting fears of further policy cancellations if rates are not raised.
  • California Insurance Commissioner Ricardo Lara, who provisionally approved the hikes, has faced criticism for his absence at the hearing, fueling questions about regulatory oversight.