In a recent filing with the California Department of Insurance, the company’s state subsidiary has proposed raising homeowners insurance rates by 30%, condo insurance rates by 36%, and renters insurance rates by an unprecedented 52%.
According to a statement issued to FOX Business, “State Farm General Insurance Company (“State Farm General”) is working toward its long-term sustainability in California. Rate changes are driven by increased costs and risk and are necessary for State Farm General to deliver on the promises the Company every day to its customers.”
State Farm, California’s largest home insurance provider, has been strategically reducing its exposure in the state over the past few years. Last year, the insurance giant announced it would cease accepting new home insurance applications in California, citing “historic” increases in construction costs and inflation.
In March, State Farm announced plans to cut 72,000 home and apartment policies in California due to inflation, regulatory costs, and increasing risks from catastrophes. At the time, California’s Insurance Commissioner, Ricardo Lara, referred to the situation as “a crisis.”
Now, with the company’s recent request for significant rate hikes, Lara is raising further concerns about the stability of the insurance market in the state.
“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 said that the rate increases must be approved by the California Department of Insurance. The DOI had already approved a 6.9% rate increase for State Farm in January 2023. Additionally, an intervenor group approved a 20% rate hike for State Farm homeowners and condo policies in December.
He added: “We will use all the Department’s investigatory tools to get to the bottom of State Farm’s financial situation. We take this process seriously.”
