SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
A State Farm insurance company sign sits amid the rubble of a building destroyed by the Palisades Fire on Sunset Boulevard in the Pacific Palisades neighborhood of Los Angeles on January 16, 2025.
(Photo: Frederic J. Brown / AFP)
State Farm Accused of Trying to 'Cash in on a Terrible Tragedy' With $740 Million 'Bailout'
The head of Consumer Watchdog argued the company is "detouring the rules that protect state consumers from insurance price gouging."
Feb 04, 2025
The insurance giant State Farm on Monday asked California state insurance regulators to approve an emergency interim rate hike of 22%, drawing pushback from the nonprofit Consumer Watchdog, which accused the company of not providing the financial data necessary to justify the increase.
"State Farm wants to fill its bank accounts on the backs of California homeowners, some of whose homes are in ashes," said Carmen Balber, Consumer Watchdog's executive director. "Insurance Commissioner [Ricardo] Lara must require State Farm to prove it needs this staggering increase."
Devastating wildfires ravaged the Los Angeles area starting in early January, compounding an already escalating insurance crisis in the state and causing between $35 to $45 billion in insured property losses, according to one estimate. The fires, which are now either out or fully contained, generated over 8,700 claims for State Farm General, the California homeowners insurance affiliate of the firm State Farm Mutual Automobile Insurance Company. The compnay said it has paid over a billion to customers due to the blazes.
State Farm General is the largest insurance group in the state. The firm stopped writing any new policies in May 2023, and last spring the company announced it would not renew plans for tens of thousands of homeowners—though it has said it will renew policies for those impacted by the recent fires in Los Angeles County.
In a letter to the California Department of Insurance, leaders at State Farms General requested that the department take "emergency action to help protect California's fragile insurance market," by allowing interim rate increases of 22% for homeowners, 15% for renters, 15% for condo owners, and 38% for rental dwellings.
"State Farm General's rate filings raise serious questions about its financial condition," department spokesman Gabriel Sanchez said, according to the outlet Insurance Business.
Proposition 103, a measure passed in 1988 which sought to protect consumers from arbitrary insurance rate hikes, requires insurance companies to back up their rate applications with "comprehensive data," according to the California's insurance commissioner.
Consumer Watchdog said that State Farm General is asking for an increase on an interim basis, meaning "without having to prove that it needs that increase, or the impact higher premiums will have on the ability of consumers to afford coverage."
The letter from State Farm General to the department includes an "illustration of State Farm General financial deterioration" as an attachment.
According to Consumer Watchdog, the requested 22% hike on home insurance rates amounts to $740 million a year for the company. The group has called the request a "bailout."
The request comes after State Farm General last summer asked for a 30% rate increase for its homeowners, a 52% rate increase for renters, and a 36% rate increase for condominium owners. In December 2023 it was approved for a 20% increase for homeowners and condominium owners.
The insurance company is "trying to cash in on a terrible tragedy by detouring the rules that protect state consumers from insurance price gouging—at a time when those safeguards are more important than ever," said Balber.
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
The insurance giant State Farm on Monday asked California state insurance regulators to approve an emergency interim rate hike of 22%, drawing pushback from the nonprofit Consumer Watchdog, which accused the company of not providing the financial data necessary to justify the increase.
"State Farm wants to fill its bank accounts on the backs of California homeowners, some of whose homes are in ashes," said Carmen Balber, Consumer Watchdog's executive director. "Insurance Commissioner [Ricardo] Lara must require State Farm to prove it needs this staggering increase."
Devastating wildfires ravaged the Los Angeles area starting in early January, compounding an already escalating insurance crisis in the state and causing between $35 to $45 billion in insured property losses, according to one estimate. The fires, which are now either out or fully contained, generated over 8,700 claims for State Farm General, the California homeowners insurance affiliate of the firm State Farm Mutual Automobile Insurance Company. The compnay said it has paid over a billion to customers due to the blazes.
State Farm General is the largest insurance group in the state. The firm stopped writing any new policies in May 2023, and last spring the company announced it would not renew plans for tens of thousands of homeowners—though it has said it will renew policies for those impacted by the recent fires in Los Angeles County.
In a letter to the California Department of Insurance, leaders at State Farms General requested that the department take "emergency action to help protect California's fragile insurance market," by allowing interim rate increases of 22% for homeowners, 15% for renters, 15% for condo owners, and 38% for rental dwellings.
"State Farm General's rate filings raise serious questions about its financial condition," department spokesman Gabriel Sanchez said, according to the outlet Insurance Business.
Proposition 103, a measure passed in 1988 which sought to protect consumers from arbitrary insurance rate hikes, requires insurance companies to back up their rate applications with "comprehensive data," according to the California's insurance commissioner.
Consumer Watchdog said that State Farm General is asking for an increase on an interim basis, meaning "without having to prove that it needs that increase, or the impact higher premiums will have on the ability of consumers to afford coverage."
The letter from State Farm General to the department includes an "illustration of State Farm General financial deterioration" as an attachment.
According to Consumer Watchdog, the requested 22% hike on home insurance rates amounts to $740 million a year for the company. The group has called the request a "bailout."
The request comes after State Farm General last summer asked for a 30% rate increase for its homeowners, a 52% rate increase for renters, and a 36% rate increase for condominium owners. In December 2023 it was approved for a 20% increase for homeowners and condominium owners.
The insurance company is "trying to cash in on a terrible tragedy by detouring the rules that protect state consumers from insurance price gouging—at a time when those safeguards are more important than ever," said Balber.
The insurance giant State Farm on Monday asked California state insurance regulators to approve an emergency interim rate hike of 22%, drawing pushback from the nonprofit Consumer Watchdog, which accused the company of not providing the financial data necessary to justify the increase.
"State Farm wants to fill its bank accounts on the backs of California homeowners, some of whose homes are in ashes," said Carmen Balber, Consumer Watchdog's executive director. "Insurance Commissioner [Ricardo] Lara must require State Farm to prove it needs this staggering increase."
Devastating wildfires ravaged the Los Angeles area starting in early January, compounding an already escalating insurance crisis in the state and causing between $35 to $45 billion in insured property losses, according to one estimate. The fires, which are now either out or fully contained, generated over 8,700 claims for State Farm General, the California homeowners insurance affiliate of the firm State Farm Mutual Automobile Insurance Company. The compnay said it has paid over a billion to customers due to the blazes.
State Farm General is the largest insurance group in the state. The firm stopped writing any new policies in May 2023, and last spring the company announced it would not renew plans for tens of thousands of homeowners—though it has said it will renew policies for those impacted by the recent fires in Los Angeles County.
In a letter to the California Department of Insurance, leaders at State Farms General requested that the department take "emergency action to help protect California's fragile insurance market," by allowing interim rate increases of 22% for homeowners, 15% for renters, 15% for condo owners, and 38% for rental dwellings.
"State Farm General's rate filings raise serious questions about its financial condition," department spokesman Gabriel Sanchez said, according to the outlet Insurance Business.
Proposition 103, a measure passed in 1988 which sought to protect consumers from arbitrary insurance rate hikes, requires insurance companies to back up their rate applications with "comprehensive data," according to the California's insurance commissioner.
Consumer Watchdog said that State Farm General is asking for an increase on an interim basis, meaning "without having to prove that it needs that increase, or the impact higher premiums will have on the ability of consumers to afford coverage."
The letter from State Farm General to the department includes an "illustration of State Farm General financial deterioration" as an attachment.
According to Consumer Watchdog, the requested 22% hike on home insurance rates amounts to $740 million a year for the company. The group has called the request a "bailout."
The request comes after State Farm General last summer asked for a 30% rate increase for its homeowners, a 52% rate increase for renters, and a 36% rate increase for condominium owners. In December 2023 it was approved for a 20% increase for homeowners and condominium owners.
The insurance company is "trying to cash in on a terrible tragedy by detouring the rules that protect state consumers from insurance price gouging—at a time when those safeguards are more important than ever," said Balber.
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.