Wildfire Survivors 'Deserve Better,' Advocates Say as California Approves State Farm Rate Hike
Regulators like California Insurance Commissioner Ricardo Lara "need to hold insurance giants like State Farm accountable to paying out what they owe, not reward them with rate hikes," said one watchdog.
California Insurance Commissioner Ricardo Lara on Tuesday adopted a judge's ruling allowing State Farm General, the state's largest home insurer, the ability to temporarily hike insurance rates following devastating fires that ravaged the Los Angeles area in January. The decision drew rebuke from watchdog groups, with one organization calling the hike "unjustified."
In February, State Farm sought a rate increase of 22% for homeowners and 15% for renters after the Los Angeles-area fires, citing the need to protect the "fragile California insurance market."
After conducting a hearing in April, an administrative law judge issued a proposed order on Monday, approving an emergency rate increase of 17% for homeowners line, down from the 22% the company had requested, and a 15% increase for renters. The emergency rate increase will go into effect June 1, according to the commissioner's office.
Carmen Balber, executive director of the group Consumer Watchdog, which has been active in opposing the State Farm rate hikes, said Tuesday that the decision "is a great disappointment" that forces "consumers to pay now" but allows "State Farm to wait months before having to show its math."
Consumer Watchdog argued before the administrative law judge that State Farm had failed to put forward adequate justification for the rate increases, and that the issue should go before a full rate hearing.
Lara said on Tuesday that State Farm will still need to justify its financial condition at a full hearing. According to Consumer Watchdog, that hearing is tentatively scheduled for October.
"State Farm policyholders, many of whom are struggling to get their claims paid by the company after the Los Angeles fires, are now facing double-digit rate hikes," Balber also said.
Lara gave sign off on the rate hikes despite calls for his office to probe complaints around the insurance giant's handling of claims made by survivors of the Los Angeles area fires, according to CalMatters. Fire victims have accused State Farm of denying or delaying claims, and had advocated for Lara to reject the rate hike request.
"The survivors of the Eaton and Palisades fires deserve better. Their stories of financial and emotional devastation after fighting with State Farm are heartbreaking and are an indictment of the state of the insurance industry," said Rick Morris, insurance campaigner with the watchdog group Public Citizen's climate program, on Tuesday.
"Regulators like Commissioner Lara need to hold insurance giants like State Farm accountable to paying out what they owe, not reward them with rate hikes," he added.
Public Citizen also highlighted accusations leveled by Consumer Watchdog in October of 2024 that State Farm had boosted profits for its parent company, State Farm Mutual, at the expense of policyholders.
As part of the ruling, according to the commissioner's office, State Farm will obtain $400 million from its parent company to boost its solvency and will also refrain from implementing some nonrenewals through the end of 2025.
State Farm 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 paused nonrenewals in Los Angeles County following the January wildfires.
Approval for the interim hike 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. Separately, in December 2023 it was approved for a 20% increase for homeowners and condominium owners.
