- State Farm is asking California’s insurance commissioner for permission to raise premiums by an average of 22%. It comes as Southern California begins to rebuild after deadly wildfires.
- The insurance giant says it needs to adjust prices to account for higher risk as climate change makes wildfires more likely.
- California’s Department of Insurance said it was concerned about a potential gap between State Farm’s request, which cited financial troubles, and the company’s actual condition.
As Los Angeles rebuilds its communities following last month’s devastating fires, State Farm is asking California for permission to raise its insurance premiums by an average of 22%. The company says it has lost money over the past decade as disaster risks increase, while payouts for the recent fires will be the costliest disasters in the company’s history.
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State Farm says one credit ratings company downgraded its financial strength last year due to its capital position. They say more wildfires could exacerbate the issue.
As reports, including one from World Weather Attribution, find wildfires like the recent ones in LA are tied to climate change, insurance companies are looking to raise prices to account for higher risk.
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Fires in and around Los Angeles last month killed 29 people and caused billions of dollars in damages.
“Insurance will cost more for customers in California going forward because the risk is greater in California,” the company said in a press release. “Higher risks should pay more for insurance than lower risks.”
Last fall, the company faced accusations, later confirmed in reporting by the Los Angeles Times, that its California branch passed along hundreds of millions of dollars in profits to its parent company while simultaneously claiming that financial distress justified a 30% rate hike.
California’s Department of Insurance said it will work toward crafting a policy recommendation for the state’s insurance commissioner.
Gabriel Sanchez, the department’s press secretary, told USA Today that “State Farm General’s rate filings raise serious questions about its financial condition.”
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State Farm said it has paid over $1 billion in insurance claims. It’s part of the over $4 billion insurance companies have paid out statewide.
The company also gave some relief to policyholders last month during the fires. They offered renewals for those it had originally planned to drop due to concerns about risk.
LAUREN TAYLOR: As Southern California rebuilds its communities following devastating fires last month, State Farm is asking the state for permission to raise its insurance premiums by an average of 22%.
The company says it has lost money over the past decade as risk has gone up, and pay outs for the recent fires will be the costliest disasters in the company’s history. The company says one credit ratings company downgraded its financial strength last year due to its capital position, and more wildfires could exacerbate the issue.
As reports like one from World Weather Attribution find that wildfires like the recent ones have a tie to climate change, insurance companies are looking to raise prices to account for higher risk.
Fires in and around Los Angeles last month killed 29 people and caused billions of dollars in damages.
“Insurance will cost more for customers in California going forward because the risk is greater in California,” the company said in a press release. “Higher risks should pay more for insurance than lower risks.”
Last fall, the company faced accusations confirmed in reporting by the Los Angeles Times that its California branch passed along hundreds of millions of dollars in profits to its parent company at the same time that it was claiming that financial distress justified a 30% rate hike.
California’s Department of Insurance said it will work toward crafting a policy recommendation for the state’s insurance commissioner.
Gabriel Sanchez, the department’s press secretary, told USA Today, quote, “State Farm General’s rate filings raise serious questions about its financial condition.”
State Farm said it has paid over $1 billion in insurance claims, part of the over $4 billion insurance companies have paid out statewide.
The company also gave some relief to policyholders last month during the fires, offering renewals for policyholders it had originally planned to drop due to concerns about risk.
For Straight Arrow News, I’m Lauren Taylor.
And for all the latest updates on this and other top stories, download the Straight Arrow News app or visit SAN.com.
Media Landscape
See who else is reporting on this story and which side of the political spectrum they lean. To read other sources, click on the plus signs below. Learn more about this data
Left 42%
Center 37%
Right 21%
Bias Distribution
27 other sources covering this story
Total News Sources
27
Leaning Left
8
Center
7
Leaning Right
4
Last Updated
14 hours ago
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