State Farm General is proposing substantial rate hikes, prompting questions from California Insurance Commissioner Ricardo Lara.
State Farm General is proposing substantial rate hikes, prompting questions from California Insurance Commissioner Ricardo Lara.
The insurance giant is seeking approval for a 30% increase for homeowners, a 36% increase for condo owners, and a 52% increase for renters. If approved, this would mark the company's largest rate hike in seven years.
Commissioner Lara has expressed concern over the proposed increases, suggesting they may reflect underlying issues within State Farm General. “State Farm General’s latest rate filings raise serious questions about its financial condition,” Lara stated. “This has the potential to affect millions of California consumers and the integrity of our residential property insurance market.”
Lara’s office is committed to thoroughly investigating the company's financial status before making a decision on the rate hike applications. Earlier this year, State Farm General announced that it would not renew approximately 30,000 homeowners’, rental dwelling, and other property insurance policies as part of a partial withdrawal from the California market. Additionally, around 42,000 commercial apartment policies were also slated for non-renewal.
At the time, State Farm General cited "difficult but necessary decisions" to maintain sustainability in California. “This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” the company explained in March.
Regarding the current rate hike proposal, State Farm General stated, “Rate changes are driven by increased costs and risks and are necessary for State Farm General to deliver on the promises the company makes every day to its customers. We continue to look for ways to maintain competitive rates.”
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By Lew Craparotta
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