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The head of Consumer Watchdog argued the company is "detouring the rules that protect state consumers from insurance price gouging."
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.
One of the Rams’ corporate sponsors is an affiliate of Shell Oil, one of the worst carbon polluters on the planet.
The NFL was forced to relocate Monday night’s playoff game between the Los Angeles Rams and the Minnesota Vikings to State Farm Stadium in Arizona because the Rams’ home field, SoFi Stadium, is only 10 miles from the Palisades Fire, the largest of six active blazes in the Los Angeles area. Turbocharged by climate change, the fires have killed at least 24 people, burned more than 40,000 acres, destroyed more than 12,300 structures, and displaced tens of thousands of residents.
The day before the game, Rams quarterback Matthew Stafford told reporters that his team was playing for more than just themselves—they were playing for the entire city of Los Angeles. “Every time we suit up, we’re the Los Angeles Rams,” he said. “We play for the people in this community, the people that support us, and this week will be another example of that.”
But the Rams also play for their corporate sponsors, which ironically include Shell Oil Products US, an affiliate of a multinational oil company that bears major responsibility for the conditions that set the stage for Los Angeles’ devastating fires.
Will mounting extreme weather disasters—and stadium damage projections—ever convince the L.A. Rams and other sports teams to sever their ties to the very companies responsible for the climate crisis?
The Rams are not alone in their choice of partnerships. More than 60 U.S. pro sports teams and at least three leagues have lucrative sponsorship deals with oil companies and electric and gas utilities that afford the companies a range of promotional perks, from building signage to uniform logos to facility naming rights, according to a survey conducted last fall by UCLA’s Emmett Institute on Climate Change and the Environment. Likewise, sports teams and leagues partner with banks and insurance companies that invest billions of dollars in coal, oil and gas companies, all to the detriment of public health and the environment.
With annual payrolls running as high as $240 million in the NFL, $300 million in the MLB, and $200 million in the NBA, it is not hard to understand why teams pursue corporate sponsorships.
Companies, meanwhile, sponsor teams and leagues to increase visibility and build public trust. According to a 2021 Nielsen “Trust in Advertising” study, 81 percent of consumers completely or somewhat trust brands that sponsor sport teams, second only to the trust they have for friends and family. By sponsoring a team, corporations increase the chance that fans will form the same bond with their brand that they have with the team.
Oil companies, gas and electric utilities, and the banks and insurance companies that finance them have yet another rationale for aligning with a team or a league: to distract the public from their unethical practices and portray themselves as public-spirited, good corporate citizens. It’s called sportswashing, a riff on the term greenwashing.
When Bank of America—which invested $33.68 billion in fossil fuel companies in 2023 alone—signed on as an official sponsor of the FIFA World Cup last year, the company’s chief marketing officer explained how it works. “The World Cup is religious for the fans, it’s an entirely different beast,” he said. “It allows us a very powerful place for the emotional connections to build the brand.” Having a strong brand, he added, can provide a “halo effect” for a company.
The Rams and Shell have been partners since 2018, but in October 2023 the Rams announced that the company signed a multiyear contract for an undisclosed sum to be the “exclusive fuel sponsor” of the team, SoFi Stadium and Hollywood Park, the mixed-use, under-construction district surrounding the stadium that is owned and operated by Rams CEO Stan Kroenke. Shell now offers gasoline discounts on game days and collaborates with the three organizations on community initiatives on health, STEAM (science, technology, engineering, the arts and mathematics) education, sustainability and other issues.
A home is engulfed in flames during the Eaton fire in the Altadena area of Los Angeles County, California on January 8, 2025. (Photo by Josh Edelson/AFP via Getty Images)
The Rams could not have picked a more inappropriate partner (except, perhaps, ExxonMobil). Shell a cosponsor of community health projects? It’s one of the top 20 air polluters in the country. A supporter of STEAM education? The first initial of that acronym stands for “science,” but Shell is still funding climate science disinformation, even though it was aware of the threat its products pose as far back as the 1950s. And a promoter of sustainability? Historically the company is the fourth-biggest investor-owned carbon polluter and the second-biggest since 2016, when the Paris climate agreement to cut emissions was signed.
In 2020, the company did adopt a number of goals to achieve net-zero emissions by 2050. Since then, however, it has backtracked, reneging on its pledge to cut oil production 1 to 2 percent annually through 2030, weakening its target of reducing emissions from 25 to 40 percent by 2030 to only 20 to 30 percent, and completely abandoning its goal of lowering the total “net carbon intensity” of its products (the emissions per unit of energy) 45 percent by 2035 due to “uncertainty in the pace of change in the energy transition.”
The Rams are not the only U.S. pro team, nor the only team in California, enabling sportswashing. Chevron sponsors the Los Angeles FC soccer team, Sacramento Kings and San Francisco Giants; Arco, owned by Marathon Petroleum, sponsors the L.A. Dodgers and Sacramento Kings; NRG Energy, an electric utility that sold off its renewable energy division years ago, sponsors the San Francisco 49ers; and Phillips 66, owner of Union 76 gas stations, also sponsors the Dodgers. Although the two NBA teams in Los Angeles do not have fossil fuel industry-related sponsors, ExxonMobil is an “official marketing partner” of the NBA, WNBA and NBA Development League in the United States and China.
Given California has been plagued by climate change-driven wildfires for years, one would hope that sports teams in the state would reconsider their fossil fuel industry sponsorships. Last August, more than 80 public interest groups, scientists and environmental advocates tried to get the Dodgers to do just that, calling on the team to cut its ties to Phillips 66. “Using tactics such as associating a beloved, trusted brand like the Dodgers with enterprises like [Union] 76,” they wrote in an open letter, “the fossil fuel industry has reinforced deceitful messages that ‘oil is our friend,’ and that ‘climate change isn’t so bad.’” Since it was first posted, more than 22,000 Dodgers fans have added their names to the letter, which urges the team to end its sponsorship deal with the oil company “immediately.” To date, they are still waiting for a response.
California state, county and city governments, meanwhile, are going after the perpetrators in court. Altogether they have launched nine lawsuits against Chevron, ExxonMobil and Shell to hold them accountable for deceiving the public and force them to pay climate change-related damages. The cities filing suit include Imperial Beach, Oakland, Richmond (home to a Chevron refinery), San Francisco and Santa Cruz. Five of the nine lawsuits also name Marathon Petroleum and Philips 66 as defendants.
The UCLA survey only documented the links between pro sports teams and their leagues with oil and utility companies. Banks and insurance companies that finance fossil fuel projects also have sponsorship deals. For example, six of the 12 banks that invested the most in fossil fuel companies since the Paris climate agreement was signed in 2016—Bank of America, Barclays, Citigroup, JPMorgan Chase, Scotiabank and Wells Fargo—have each spent a small fortune on sports facility naming rights. Meanwhile, a review of the 30 NFL stadiums found that at least three are named for an insurance company with significant fossil fuel-related investments. One of those facilities is State Farm Stadium in Glendale, Arizona, where the Rams and Vikings played Monday night. The biggest home and auto insurer in the country, State Farm bought naming rights to the stadium in the fall of 2018 for an undisclosed sum.
Unlike all but one of its competitors, which have significantly cut back their investments in fossil fuel projects, State Farm has dramatically increased them, according to a September 2024 Wall Street Journal investigation. As of last May, the company held $20.6 billion in shares and bonds in 65 fossil fuel companies, including Chevron, ExxonMobil and Shell, according to a 2024 report by Urgewald, a German environmental group.
In May 2023, at the same time it was expanding its fossil fuel industry portfolio, State Farm stopped issuing new homeowner policies in California because of wildfire risks and ballooning construction costs. Less than a year later, it announced that it would not renew 30,000 homeowner policies and 42,000 policies for commercial apartments in the state. Some 1,600 of those policies covered homes in Pacific Palisades, the neighborhood just destroyed by the Palisades Fire.
State Farm’s “2023 Impact Report” states the obvious: “Being a good steward of our environmental resources just makes sense for everyone.” But for the company, that only means cutting its own carbon emissions, reducing waste at its facilities, and promoting paperless options for its customers. What about the impact of the billions of dollars the company invests in major carbon polluters? The report doesn’t mention it.
Hurricanes, snowstorms, and other severe events have forced the NFL to cancel preseason games and postpone and move regular season games in the past. But Monday night’s game in Arizona was the first time the NFL had to relocate a postseason game since 1936, when it moved the championship game between the Green Bay Packers and the Boston Redskins from Boston to New York because of low ticket sales.
What about the impact of the billions of dollars the company invests in major carbon polluters?
Going forward, the NFL and other sports leagues likely will have to move games more often, if not abandon facilities, because of climate change-related extreme weather events. A handful of events over the last two decades may signal what team owners should anticipate. They include:
Several NFL stadiums are especially at risk, according to a report published last October by Climate X, a data analytics company. The report ranks the 30 NFL stadiums based on their vulnerability to such climate hazards as flooding, wildfires, extreme heat and storm surge, and compares projected damage over the next 25 years to each stadium’s current replacement value.
The three stadiums that face the greatest threat? MetLife Stadium, SoFi Stadium and State Farm Stadium, in that order.
The report projects that MetLife Stadium, the New Jersey home of the New York Giants and Jets, will suffer the highest total percentage loss of 184 percent of its current replacement value, with cumulative damages of more than $5.6 billion by 2050 due to its low elevation and exposure to surface flooding and storm surges. (Like State Farm, the MetLife insurance company has major fossil fuel investments. As of May 2024, it held $7.4 billion in stocks and bonds in more than 200 companies, including Chevron, ConocoPhillips, ExxonMobil and Shell.)
SoFi Stadium and State Farm Stadium, meanwhile, are both expected to sustain significant losses due to increased flooding and … wildfires. The Climate X report estimates that SoFi Stadium will incur a cumulative loss of 69 percent of its current replacement value with damages of $4.38 billion by 2050. State Farm Stadium, the third-most vulnerable facility, likely will experience a 39 percent total loss, with $965 million in cumulative damages.
Will mounting extreme weather disasters—and stadium damage projections—ever convince the L.A. Rams and other sports teams to sever their ties to the very companies responsible for the climate crisis?
Last summer, U.N. Secretary-General António Guterres castigated coal, oil and gas companies—which he dubbed the “godfathers of climate chaos”—for spreading disinformation and called for a worldwide ban on fossil fuel advertising. He also urged ad agencies to refuse fossil fuel clients and companies to stop taking their ads. So far, more than 1,000 advertising and public relations agencies worldwide have pledged to refuse working for fossil fuel companies, their trade associations, and their front groups.
It is past time for professional sports teams and leagues to do the same.
One observer said it "really feels like the climate crisis is putting the home insurance industry on a fast track to being almost as reviled as the health insurance industry."
As deadly wildfire incinerated more than 1,000 homes and other structures in Los Angeles County this week, insurance companies are sparking outrage for having recently canceled homeowners' policies across California—including in some of the areas hit hardest by the current blazes.
More than 1,000 homes, businesses, and other buildings have burned in the Palisades, Hurst, and Eaton fires—the latter of which has killed two people, The Los Angeles Times reported Wednesday. Fueled by fierce Santa Ana winds and extraordinarily dry conditions, all three fires were at 0% containment as of Wednesday afternoon, according to the California Department of Forestry and Fire Protection (CAL FIRE).
Authorities have issued mandatory evacuation orders for more than 80,000 residents. Los Angeles County Fire Chief Anthony Marrone told reporters Wednesday morning that a "high number of people who didn't evacuate" suffered serious injuries. Hundreds of thousands of area residents are also without power.
CAL FIRE said on Wednesday afternoon that the largest of the three blazes, the Palisades Fire, had burned more than 11,000 acres, while the Eaton Fire had scorched over 10,600 acres and the Hurst Fire topped 500 acres burned. Firefighters battling the Palisades Fire reported hydrants coming up dry.
Amid increased extreme weather events driven by the climate emergency, insurance companies have faced criticism for canceling policies and pulling out of states with elevated wildfire or hurricane risk.
State Farm, one of California's largest insurers, announced last year that it would not renew 30,000 home insurance policies throughout the state—including at least hundreds in areas affected by the current wildfires—explaining that the move was meant to avert a "financial failure" that would "detrimentally impact the entire market."
Other insurance companies have taken similar action, leaving their customers scrambling to find coverage.
Michael DeLong, research and advocacy associate at the Consumer Federation of America, told Common Dreams Wednesday that while climate-driven extreme weather has "made many areas riskier to insure," insurance companies are also canceling policies because "they're trying to take advantage of the situation of rising risks and rising costs to weaken consumer protections."
"They've been waging a campaign against Proposition 103… a ballot initiative that got passed in the late 1980s that, among other things, puts in place a lot of consumer protections about insurance," he added. "This has been a big deal for consumers and it's helped keep rates down. But insurance companies really hate these consumer protections and have been trying to weaken them."
In a Wednesday interview with Common Dreams, Jamie Court, president of the Los Angeles-based group Consumer Watchdog, noted that "under Prop 103, we could challenge rate hikes, and we saved $1 billion by challenging rate hikes that were too high last year."
However, advocates say that California Insurance Commissioner Ricardo Lara's new "sustainable insurance strategy" will make it harder to challenge rates and lacks transparency and public input.
DeLong said Lara is "allowing the net cost of reinsurance to be passed on to consumers."
Insurance Commissioner Ricardo Lara Reinsurance Regulation To Pump Up Homeowners Rates By 40% Without Guarantees of New Wildfire Coverage! With No Opportunity For Public Input! Read: consumerwatchdog.org/insurance/la... #insurance #InsuranceClaims #california
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— Consumer Watchdog (@consumerwatchdog.bsky.social) January 4, 2025 at 10:49 AM
Reinsurance is an arrangement in which insurance companies transfer risk to another insurer to mitigate damages.
"Until a few weeks ago, California's regulations didn't allow the cost of reinsurance to be passed on to consumers, and now they do," DeLong explained. "So that's probably going to drive up costs for consumers. The commissioner and the department say it's going to make the insurance industry more stable—we're kind of skeptical of that."
"Another reform that he's done is allowing the use of catastrophe models in insurance," DeLong added, referring to a risk management tool that helps insurers assess potential financial impacts of disasters. "Every other state allows insurance companies to use them; California did not until recently. Catastrophe models can be helpful and useful; the problem is that many catastrophe models aren't that good; they're based on inaccurate or incomplete information and they don't have any transparency."
Court also decried the lack of transparency in catastrophe models, which he said "can say anything they want, and then we have to pay the rate." He also criticized Lara's proposal to allow insurers to hike rates in exchange for a purported commitment to cover more properties in wildfire areas.
Lara said last year that "insurance companies will write no less than 85% of their statewide market share in wildfire distressed areas,"
However, Court cautioned that Lara is assuming "that the companies are actually going to increase their footprint in wildfire areas."
"When you look at the details... there are these big loopholes," he said. "Insurance companies have to commit to 85% [wildfire area saturation] within two years—or they can do 5% more than they're doing now. So if they're at 0%, they can go to 5%. This is complete bullshit."
As coverage becomes more difficult to obtain, hundreds of thousands of California homeowners have turned to the state's FAIR Plan, an insurer of last resort, which has more than doubled the number of policies issued since 2020.
"If the FAIR Plan is the only thing you can do, take that," DeLong said. "In the meantime, you can reach out to the Department of Insurance and let them know that you want them to protect consumers and reject excessive rate increases."
"You can also try mitigation measures to reduce risk, like clearing brush around your home, improving your roof so it's a Class A roof, which means it's very difficult to catch on fire, you can take measures to prevent embers from starting fires on your property," he added. "The problem is that all of that costs money, and not everyone may be able to afford that… California has recently started some proposals to provide grants to consumers to undertake these measures, and these should be expanded even more."
"There is some good news," DeLong said. "The California Department of Insurance is working on a public catastrophe model, one that would have opportunities for input from consumers, that would be based on data that's fair and open."
"However, that's going to take at least a couple of years to get off the ground," he added.
Court concurred. "We're a long way away from that, and it's not even going to be something that companies have to use, it's something that would be supplemental," he said of the public model. "I think it's giving lip service, but I think it's the right direction. It just needs to be much more aggressive."