California Rejects State Farm's Rate Increase Request Amid LA Fire Claims

California's insurance commissioner, Ricardo Lara, has rejected State Farm's request for a 22 percent emergency rate hike for home insurance due to the devastating Los Angeles fires. Lara stated that State Farm has not met its burden to justify the rate increase, and a meeting is scheduled for February 26 to discuss the company's financial stability and transparency. State Farm had requested rate increases ranging from 15 to 38 percent for different types of policies, citing over 8,700 claims and $1 billion in payouts related to the fires. The company warned that without the rate increase, it may need to reconsider its options in the California insurance market. Lara emphasized that the burden is on the insurer to demonstrate and support its rate requests under California Proposition 103. California's average home insurance cost is lower than the national average, and former deputy insurance commissioner Rex Frazier believes that wildfire insurance is still viable in the state. Lara has also sponsored 10 legislative bills aimed at safeguarding consumers for wildfire mitigation and recovery. The Los Angeles fires have resulted in 33,717 claims filed and $6.9 billion in claims paid, with estimated insurance losses potentially reaching $20 billion. State Farm expressed disappointment at the rejection, stating that it may affect its ability to protect Californians against future losses. The company had claimed that it paid $1.26 in claims and expenses for every $1.00 collected through premium payments over a nine-year period, resulting in over $5 billion in cumulative losses.