State Farm pursues additional 11% rate increase in California after emergency rate hike approval
Condo owners and renters could see a larger jump in insurance costs as State Farm General pursues an overall 30% rate increase for homeowners policies in California.
This comes just a week after the company was granted a 17% emergency interim hike, down from the nearly 22% increase it originally requested, following a ruling approved by insurance commissioner, Ricardo Lara.
State Farm confirmed to the Guardian that it plans to seek an additional 11% rate hike the company had proposed last year.
First reported by the San Francisco Chronicle, State Farm says these increases are necessary due to 'severe capital depletion', especially after the devastating Los Angeles County wildfires.
If approved, the average annual premium could rise by about $600 for homeowners, $163 for condo owners and $30 for renters, the Chronicle reported. A spokesperson for the California department of insurance told the Guardian that a rate hearing on the same request is scheduled to 'get to the facts'.
'They want more? We want more data, more transparency, more policyholders served, and more policies written in wildfire distressed areas,' a spokesperson for the department said in a statement. 'State Farm wanting a rate increase doesn't change the law. All rates must be justified so consumers don't pay more than is required.'
The increase will apply to all of the roughly 1 million homeowners State Farm insures in the state.
The next hearing is scheduled for 20 October.
State Farm General has said that the rate hike intends to help 'stabilize' the company's financial position and ensure its ability to serve Californians over the 'long-term'. The company said that the increase was not to cover wildfire losses, but rather a 'critical first step' in restoring its overall financial health, which is essential for paying future claims.
'While we are pleased that Commissioner Lara approved the interim rate of 17% for State Farm General Insurance Company, this change only addressed part of the original request of 30% filed in June 2024,' a spokesperson for State Farm General Insurance Company said.
Back in February, State Farm General estimated its direct wildfire-related losses at about $7.6bn, including both reported and anticipated claims.
'We remain deeply concerned about the financial position of State Farm General, as it is difficult to match price to risk in California,' the insurer said in a May update.
In June of last year, the company sought a 30% rate hike for homeowners' policies, as well as a 36% increase for condo owners and a 52% increase for renters. The sudden increase raised questions about the insurer's financial stability.
State Farm chose not to renew fire insurance for 1,626 State Farm customers in the Palisades neighborhood in 2024, according to California's insurance office. They represented about 70% of State Farm's market share in Pacific Palisades, according to the San Francisco Chronicle.
Sign up to Headlines US
Get the most important US headlines and highlights emailed direct to you every morning
after newsletter promotion
'This decision was not made lightly and only after careful analysis of State Farm General's financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,' the insurer said.
The consumer advocacy group Consumer Watchdog said it had urged Lara to reject the emergency interim rate increase during a hearing in April, stating that State Farm General had 'failed to meet the legal standard required under California law to justify a mid-proceeding rate hike'.
The group also questioned how fair the proposed settlement was between the Department and State Farm. They cited testimony from State Farm's expert, Dr David Appel, who claimed that the interim rate increase poses 'no risk to policyholders'.
'Dr Appel evaluated the settlement from State Farm's perspective alone,' said William Pletcher, litigation director at Consumer Watchdog. 'But $40 or $50 a month is a serious hardship for California families already struggling to stay afloat.'
The already-approved rate hikes will appear on homeowners' bills at their next renewal date after 1 June. An additional rate increase, if approved, would take effect at each customers' first renewal in 2026, according to the Chronicle.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
27 minutes ago
- Reuters
Warner Bros Discovery shareholders reject 2024 executive pay
June 3 (Reuters) - A majority of Warner Bros Discovery (WBD.O), opens new tab shareholders voted against the 2024 pay packages of CEO David Zaslav and other top executives at the media conglomerate's annual stockholder meeting, a Tuesday regulatory filing showed. The board of directors had recommended shareholders to vote in favor of the 2024 executive compensation; however, more than 59% of them rejected the proposal on a non-binding basis. For 2024, Zaslav's total compensation rose 4% from the prior year to $51.9 million. Warner Bros Discovery has been struggling to stem declines in its cable TV business amid widespread cord-cutting, focusing instead on its faster-growing streaming and studios divisions. Last month, it missed first-quarter revenue estimates and posted a larger-than-expected loss. The company is also moving towards a potential breakup, CNBC reported last month. WBD had laid the groundwork for a possible sale or spinoff of its declining cable TV assets last December by announcing a separation from its streaming and studio operations. Powered by a strong content slate, including the third season of HBO's "The White Lotus" and the medical drama series "The Pitt", WBD added 5.3 million streaming subscribers in the January-March quarter, beating market expectations, but still far off from streaming industry leader Netflix (NFLX.O), opens new tab. The company last month also walked back on the branding of its streaming service, Max, bringing back the HBO name it dropped two years ago.
The Independent
29 minutes ago
- The Independent
Trump is ‘obsessed' about having a call with China's Xi this week to hammer out trade deal, insiders reveal
President Donald Trump has grown increasingly focused on calling Chinese President Xi Jinping this week to get closer to a deal to end the ongoing trade war between the world's two largest economies. The White House has said that Trump and Xi will 'likely' speak this week. However, it may not be the barrier-breaking conversation the president is aiming for. 'The president is obsessed with having a call with Xi,' a person familiar with the talks told Politico. Trump believes he can untie the knot even though the U.S. is trying to change a trade relationship worth $600 billion and doing so without losing too much political capital in the U.S. The person familiar with the discussions told the outlet that the administration is 'under a lot of pressure' following China 's critical minerals blockade, which blocks U.S. access to essential components in auto and electronics manufacturing as well as the production of munitions. 'I don't think Xi is too interested in exporting any more rare earths or magnets to the United States; he's made his position clear,' the person noted. But they added that Xi would likely take Trump's call. 'The president has some leverage, and the question is when he's ready to impose maximum pressure on the Chinese government,' they said. Meanwhile, a former Trump official who remains close to the White House told Politico that the president 'feels like a call between principals is a way to cut through a lot of this noise, and get right to the heart of the matter.' However, some observers think Trump will struggle to get Xi on the phone. Obama's assistant secretary of state for East Asian and Pacific Affairs, Daniel Russel, told Politico that China 'has a sharp nose for weakness, and for all his bravado, Trump is signaling eagerness, even desperation, to cut a direct deal with Xi.' 'That only stiffens Beijing's resolve,' he added. Beijing has reportedly also been disturbed by Trump's very public showdowns with world leaders, such as with Ukrainian President Volodymyr Zelensky and South African President Cyril Ramaphosa. This has made the Chinese hesitant to participate in high-level discussions. Biden National Security Council deputy senior director for China and Taiwan, Rush Doshi, told the outlet that China 'sees President Trump as unpredictable, which poses risks reputationally for President Xi.' 'It's not usual practice for PRC diplomats to put the leader at risk of a potentially embarrassing or unpredictable encounter,' he added. White House Press Secretary Karoline Leavitt said on Monday that Xi and Trump would 'likely talk this week,' but a call has yet to be scheduled, a White House official told Politico. Meanwhile, Chinese Foreign Ministry spokesperson Lin Jian said, 'I have no information to share' regarding a call. Last month, China and the U.S. reached an agreement to lower U.S. tariffs from 145 to 30 percent. Beijing cut back on levies on imports from the U.S. to 10 percent, and they said they would remove barriers on the exports of essential minerals. The agreement included a 90-day deadline to begin fresh discussions on a wider trade deal to take into account U.S. concerns regarding Chinese trade practices. However, these new talks have gotten off to a bad start with miscommunication and differing expectations. The Trump administration has argued that China has slowed its new shipments of critical minerals and rare earth magnets. Appearing on CNBC on Friday, U.S. Trade Representative Jamieson Greer said: 'When they agreed in Geneva to remove their tariff and their countermeasures, they removed the tariff like we did. But some of the countermeasures, they've slowed on.' While a business official told Politico that 'Everyone agrees that for any additional progress to happen on tariffs, the gateway is fentanyl,' the U.S. hasn't responded to two proposals put forward by Beijing to deal with the issue. The proposals have been described as being designed by Beijing to provoke talks about what the Chinese can do to stop the flow of components that Mexican cartels use to make the drug. However, many officials in the Trump administration don't believe China would actually take the steps required to adhere to any fentanyl agreement. Former Bill Clinton and George H.W. Bush assistant U.S. trade representative Harry Broadman told Politico that while 'Trump is a deal maker,' Xi is not. 'He's a Party guy at the top of an administrative superstructure,' he said. 'I cannot imagine that Xi would get into specifics — at most, they might agree on certain principles, but that's not likely to satisfy Trump.'
The Independent
29 minutes ago
- The Independent
One of the nation's largest egg producers has lost 95% of its chickens to bird flu. It could spell price hikes
Arizona's largest egg producer has lost 95 percent of its chickens due to the bird flu, signaling a potential price increase for eggs. On Monday, the Arizona Department of Agriculture announced a third commercial farm had tested positive for bird flu in Maricopa County. At the same time, Hickman's Egg Ranch, which is Arizona's largest egg producer and one of the nation's top 20 producers, has had to destroy the chickens at three of its four farms due to the bird flu. "All of our layer flocks have been on the west side of town, have been determined to be positive. We're in the act of depopulating those farms and removing the chickens and trying to start the cleanup process," Glenn Hickman, the president and CEO of Hickman's Egg Ranch, told Fox 10 Phoenix. Hickman expressed his frustration at the three-year-long flu forcing him to destroy egg-laying chickens. "You know, since this outbreak started in February of 2022, we've lost 170 million birds and that's just got to stop," he said. According to Hickman, it will take 20 months to fully repopulate his farms. The company is trying to get by in the meantime with help from other farms. "Thankfully, we have some other farmers that we are cooperative with, and some of those have had some extra eggs. So we've been able to kind of reshift and reprioritize where those eggs are going," he said. While egg prices have been lowering around the country since they spiked earlier this year, a supply chain expert told Fox 10 Phoenix that there is a chance that egg prices in Arizona will increase. "Hickman's supplies about 80 percent of Arizona's egg production. You are reducing about 80 percent of Arizona's supply chain from about 2.2 billion to 450 million eggs," Hitendra Chaturvedi, an Arizona State University Professor of Practice for the department of supply chain management told the broadcaster. Hickman disagreed, and said the impact of losing his chickens on the market will be "pretty nominal." Arizona's egg struggles are playing out as White House Press Secretary Karoline Leavitt is singing President Donald Trump 's praises for a reduction in egg prices. She blamed the spike in egg prices on former President Joe Biden 's administration. "I remember my very first briefing, I was asked about the cost of eggs, the reporter tried to insinuate this administration was at fault, even though he had only been here for a few days or weeks," Leavitt said. "It was a result of the previous administration's terrible polices and in record time, this president has fixed that problem he inherited from Joe Biden, and prices have dropped 61 percent since this president took office." According to Trading Economics data, white, large shell eggs are around $2.52 per dozen nationally. On January 21, the same carton would have cost approximately $6.49, nationally. According to analysts at Clarify Capital, the price drop is partially a result of Americans buying fewer eggs due to their spike in prices — thus creating more supply — and a lull in new bird flu cases. Reuters also reported in April that the U.S. has increased its egg imports from Turkey, Brazil, and South Korea to help bolster supply and bring down prices. Since the outbreak began in 2022, the bird flu has affects more than 166 million birds, including 127 million egg laying birds.
