(Reuters) – California’s largest private insurer, State Farm, on Monday urged the state’s insurance regulator to approve an emergency hike in rates to help offset the hefty payouts the company is making after devastating wildfires in Los Angeles last month.
The company is seeking rate increases of up to 22% for non-tenant homeowners, 15% for renters and condominium owners, and up to 38% for rental dwellings. Non-tenant homeowners are investors who don’t live in the property they own.
The insurance regulator will investigate these rate-increase applications, a spokesperson told Reuters in an email.
State Farm insures 250,000 homes and 880,000 automobiles in Los Angeles County, according to its website. Statewide, it insures more than a million homes and more than four million automobiles, with billions of dollars in risk exposure.
High risks of frequent wildfires in parts of California have driven away insurers from the state in the past few years, leaving homeowners to turn to a much costlier state-run insurance program. The LA fires last month killed 28 people and damaged or destroyed more than 16,000 structures.
“SFG needs your urgent assistance in the form of emergency interim approval of additional rate to help avert a dire situation for our customers and the insurance market in the state of California,” it said in a filing to the regulator.
It disclosed in the filing that it had received more than 8,700 claims, as of Feb. 1, and already paid out more than $1 billion.
Over a nine-year period ending 2024, State Farm said it would pay $1.26 in claims and expenses for every $1.00 collected in premium, resulting in more than $5 billion in cumulative underwriting losses. Its after-tax net loss totaled $2.8 billion over that period.
“The Department will investigate these rate applications thoroughly to ensure Californians are charged the appropriate justified rates,” a spokesperson for the regulator said.
State Farm’s filings raise serious questions about its financial condition, the spokesperson said.
(Reporting by Kanjyik Ghosh and Bipasha Dey in Bengaluru; Additional reporting by Rishabh Jaiswal; Editing by Subhranshu Sahu)
Brought to you by www.srnnews.com
