California Insurance Commissioner Ricardo Lara temporarily approved a state form request to increase 22 % interim home owners insurance rate, California’s insurance department announced on Friday.
The approval depends on whether the company can justify the rate increase with data during a public hearing on April 8.
In a statement, the State Farm said, “Now it is time for our customers to believe in the California insurance market. The temporary nature of today’s decision does not improve this belief, but this is a step in the right direction. We are moving forward with the implementation of this temporary approved rate and will continue to work with the California insurance market.
The carrier added, “The State Farm General has worked openly and honestly with all parties in this process.” “In addition, the State Farm General will continue to monitor the ability to support its threats and make enough capital for the future.”
This week, Lara also called on the state farm to pursue 500 million capital infusion from his parents company to stop non -renewed and restore financial stability. He presented the proposal during a meeting with state farm representatives, CDI, and an interventionist.
The state form rate increases – if they stand – will be effective on June 1, and it includes 22 % for home owners, 15 % for tenants, 15 % for condominum, and 38 % for housing in rent. In May 2023, the State Farm stopped writing new policies in California and thousands of non -renewed policies.
In mid -February, Lara chose not to approve a rate request from the state form, rather than calling a career meeting to get some answers to his financial situation.
The State Farm based in Bloomington, Illinois said at the time of its application that this increase needs to be aligned to align the cost and risk, and the state form enables the construction of capital. According to the State Farm, in the last nine years, a lack of alignment means that for every $ 1 collected in the premium, the carrier has spent $ 1.26, resulting in the overall overall loss of $ 5 billion.
Prior to today’s decision, representatives of the company’s executives and consumer group Consumer Watch Dog promised Lara to their opposing cases in the posts.
During a meeting on February 26, the State Farm informed the Commissioner that when he could cover the claims of the LA Wild Fire, the disaster worsened his financial condition. Golden State’s top landlord insurance company partially blamed the devastating Los Angeles Wildfire for requesting its rate. As of February 14, the carrier reported about 11,400 total home and auto claims, paying more than $ 1.35 billion.
Insurance companies have so far paid more than 12 billion billion for the loss of two largest forest fires in La Area so far, which is flowing into the region and tens of thousands of houses have been destroyed in January.
“To resolve the matter, I am ordering the State Farm to answer questions in the government hearing, promote transparency and a path forward.” Lara described. “It is clear that other California insurers are unable to absorb existing users of the State Farm, which poses a significant threat to the end of these users.
Consumer watchdog responded to the commissioner’s decision, noting that it was temporary, and not the actual approval.
The user’s watchdog said in a statement, “The commissioner calls the hearing because the consumer care dog has been emphasized since the State Farm has made its unprecedented request to increase the 900 million ’emergency’ rate.” It is a victory for the consumers that the state form will decide on the rate of public hearing. The company has so far failed to support its application, and unless the state form proves, otherwise the hearing results should be rejected.
The state farm is the largest landlord in the state. After the state form, the largest homeowners in the state are the Farmer Insurance Group, Liberty Mutual Insurance Companies, CSAA Insurance Group, Mercury Insurance Group, Alistate Insurance Group, Auto Club Enterprises, USAA Group, and Passenger.
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