With the wildfires that ravaged Los Angeles County are now completely contained, State Farm General is seeking an emergency interim rate hike averaging 22% for California homeowners based on what it called a “dire” financial situation.
CNN reported the insurance company told the California Commissioner of Insurance Ricardo Lara that it received more than 8,700 claims and paid over $1 billion to customers following the wildfires. In its letter, State Farm added made three applications for rate increases that were not approved by the state’s insurance commission and that the interim increase was needed to “preserve its claims-paying capacity.” The company is the California’s largest provider of fire insurance, with more than 2.8 million policies in the state, but it insisted that the surplus that paid out claims was depleted following claims paid out from natural disasters.
“We know we will ultimately pay out significantly more, as these fires will collectively be the costliest in the history of the company,” said the company in a letter to Lara, adding the emergency interim rate hike would “help avert a dire situation for our customers and the insurance market in the state of California.”
The California Insurance Commission issued a statement declaring that the letter raised “serious questions about its financial condition,” adding that it would “urgently” answer the request.