State Farm, California’s largest private insurer, has urged state regulators to approve an emergency rate hike to offset massive wildfire-related payouts in Los Angeles last month.
The company is requesting rate increases of up to 22% for non-tenant homeowners, 15% for renters and condo owners, and 38% for rental properties. State regulators will review these applications to ensure fairness, a spokesperson told Reuters.
State Farm insures 250,000 homes and 880,000 vehicles in Los Angeles County. Statewide, it covers over a million homes and four million vehicles, with billions in risk exposure.
Frequent wildfires have driven many insurers out of California, forcing homeowners to rely on costly state-run programs. The LA fires last month killed 28 people and destroyed over 16,000 structures.
State Farm disclosed in a filing that it had received 8,700 claims as of Feb. 1 and already paid over $1 billion. The company warned of a “dire situation” for customers and the state’s insurance market without urgent rate adjustments.
Over the past nine years, State Farm said it has paid $1.26 in claims and expenses for every $1.00 collected in premiums, leading to over $5 billion in underwriting losses. Its after-tax net loss totaled $2.8 billion.
Regulators say they will thoroughly investigate the requested hikes and assess State Farm’s financial health. “The Department will ensure Californians are charged appropriate and justified rates,” a spokesperson stated.
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