Latest news with #FairPlan
Newsweek
20-05-2025
- Business
- Newsweek
State Farm Asks to Increase California Insurance Prices Again
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. California insurer State Farm is asking regulators for another rate hike, less than a week after it was granted permission to temporarily charge an extra 17 percent for homeowners' insurance policies. The company, the largest home insurer in the state, wants the California Department of Insurance (CDI) commissioner Ricardo Lara to approve an additional 11 percent increase for homeowners, and significant hikes for renters and condo owners, according to The San Francisco Chronicle. Newsweek contacted State Farm and the CDI for comment on Tuesday outside of regular working hours. People search through the remains of their home that was destroyed in the Eaton Fire in Altadena, California, earlier this year. People search through the remains of their home that was destroyed in the Eaton Fire in Altadena, California, earlier this It Matters Several major insurers, including State Farm, cut coverage across the state's most at-risk areas over recent years, citing growing costs and rising catastrophe exposure. Their withdrawals have left California homeowners scrambling for alternatives in a private market with shrinking availability. Many have had no other option but to turn to the state's fire insurer of last resort, the Fair Plan, even though its policies are often less extensive than those offered by private providers. State Farm says its footing in the state is increasingly shaky and needs to charge more to improve its financial conditions. For California regulators, granting such a request is a difficult choice between shielding homeowners from unreasonable rate hikes and ensuring carriers continue offering coverage in the state. What To Know State Farm has long been seeking significant rate hikes in California, where strict regulations have kept premiums artificially low for decades. In late 2023, the company got the green light to increase its homeowners' policies by an average of 20 percent starting from March 15, 2024. In late June 2024, the company asked for another rate hike of 30 percent for its homeowners' policies, 52 percent for renters, and 36 percent for condo owners. These requests were still pending when the L.A. County fires broke out in January, affecting thousands of State Farm policyholders in the area. The insurer said it has received over 12,692 claims related to the blazes and has already paid more than $3.5 billion. It expects to pay a total of $7.6 billion in claims related to the fires. Following the devastating wildfires, State Farm asked for a temporary emergency rate hike of 22 percent for its homeowners' policies, 15 percent for renters and condo owners, and 38 percent for rental dwellings, claiming the increases were necessary to stabilize the company's weakened financial position. After a judge's independent review concluded that State Farm was justified in its request, Lara approved the hikes last Tuesday, saying it was crucial to maintain "the integrity" of California's insurance market. These increases will come into effect starting June 1. What People Are Saying Deputy Insurance Commissioner Michael Soller said in a statement on Monday: "They want more? We want more — more data, more transparency, more policyholders served, and more policies written in wildfire distressed areas. Wanting doesn't change the law. All rates must be justified so consumers don't pay more than is required." State Farm said in a statement last week following the regulators' approval of its emergency rate hikes: "We remain deeply concerned about the financial position of State Farm General, as it is difficult to match price to risk in California. As we continue to emphasize in our ongoing interim rate filing, we need immediate rate increases to help stabilize State Farm General's financial condition to be able to serve our California customers for the long-term." What Happens Next State Farm will be asked to justify its rate hike requests in a hearing this fall. If its requests are found to be excessive and unreasonable by a judge, the commissioner could order the carrier to refund policyholders for the emergency hikes already approved, while the additional increases might never be implemented. Are you a California homeowner? Let me know what you think of State Farm's rate hike requests by contacting me at
Yahoo
18-05-2025
- Business
- Yahoo
State Farm rate hike sparks concerns about affordability, impact on housing market
SAN DIEGO (FOX 5/KUSI) — State Farm's newly approved emergency rate hike for homeowners insurance is triggering concerns about affordability and increased strain on the housing market. The change is set to take effect beginning in June and State Farm has said it's necessary to stabilize its finances after the recent devastating wildfires in Los Angeles. 'For homeowner's alone right now it's $5,600,' said Lindsey Smith, a State Farm policyholder. She's grappling with a 30% increase in her annual premium over the past two years. The cost to keep her family's home insured could soon go up significantly. 30 years later: A look back at the 1995 San Diego tank rampage California's insurance commissioner is allowing State Farm to increase rates: 17% for homeowners, 15% for renters and 38% for rental dwellings. 'I am wondering where that cap is going to end up being because it seems unsustainable,' said Smith. The sharp increases will take effect before a full rate justification hearing. Commissioner Ricardo Lara issued a statement that reads in part, 'State farm must now justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my department's experts.' State Farm says its already paid out more than $3.5 billion in L.A. fire claims and charging more will help avoid not renewing more policies in California. Real estate analyst Ken Kaplan says the situation is putting pressure on an already tight housing market. 'Individuals have looked at properties that are in a severe fire hazard zone who've said, okay you know we're not certain what we want to do,' he stated. Smith's community of San Elijo Hills is now 99.9% in a very high fire risk area, according to the most recent Cal Fire map. Some insurance companies aren't willing to work with that. It leaves many homeowners turning to the state's last resort option. 'You've got Fair Plan that's got not as great coverage, but you don't have any other choice and you've got a very high premium,' Kaplan explained. Smith is taking steps to lower her risk and harden her home with plans to remove vegetation. As the head of her community's fire council, she shares that advice with others to qualify for insurance discounts. It's a small win in uncertain times. 'I hope that they don't end up dropping us, but at the same time there needs to be a more comprehensive plan about where we go from here,' Smith continued. State Farm's proposed rate hike will face a full rate hearing, where the company must provide a complete justification. That is tentatively set for October. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
17-05-2025
- Business
- Yahoo
California approves State Farm's request for double-digit insurance rate hike
The state of California approved State Farm's request for a double-digit increase in home insurance premiums to help the insurer deal with financial challenges following the wildfires that devastated communities near Los Angeles in January. California Insurance Commissioner Ricardo Lara on Tuesday adopted a proposed court order that will allow State Farm to move ahead with a 17% interim homeowners insurance rate increase in the state. That's less than the insurer's initial request of a 21.8% premium hike. Under the terms of the order, which will take effect on June 1, State Farm's California-based subsidiary will receive a $400 million infusion from its parent company to ensure its solvency, and will participate in a full rate hearing at a later date. The insurer is also barred from implementing block non-renewal programs through the end of this year. "I am balancing all the facts. Protecting all State Farm customers and the integrity of our insurance market is an urgent matter," Lara said. Wildfire Victims Not Receiving Help From Fair Plan: 'I'll Have To Fight With Them For The Next Three Years' "Let me be clear: We are in a statewide insurance crisis, affecting millions of Californians. Taking this on requires tough decisions. This is not a game. This is not a media-driven moment for some to exploit — this impacts people I am committed to protecting," he added. Read On The Fox Business App State Farm General (SFG) said in a statement that the commissioner's interim rate approval is a "critical first step" for the company's ability to continue serving customers in California, adding that it "still must continue building sufficient capital for the future." State Farm Executive Fired Over Comments On Premium Hikes After California Wildfires "With this interim rate approval, SFG will obtain from its parent company, State Farm Mutual (SFM), an advance of $400 million under a surplus note to be issued by SFG, subject to regulatory approval. SFG would be obligated to repay the surplus note balance plus interest over time, subject to certain conditions, because customers outside California should not be expected to pay for risks in California," the company said. It added that it's pausing group non-renewals for the rest of 2025 for non-tenant homeowners, renters and condominium unit owners, as well as rental dwelling properties. State Farm Requests Emergency Rate Hike That Could Raise Californians' Premiums By 38% "We remain focused on helping our customers recover from the wildfires. As of May 12, we have already paid more than $3.51 billion and are handling more than 12,692 claims," State Farm added. S&P Global Ratings downgraded State Farm General's credit rating from "AA" to "A+" due to what it called a "significant deterioration of its capital position and regulatory solvency ratios." The rating change doesn't affect other State Farm group article source: California approves State Farm's request for double-digit insurance rate hike
Yahoo
15-04-2025
- Business
- Yahoo
Consumer group sues insurance commissioner over Fair Plan assessments on state homeowners
A Los Angeles consumer group has sued Insurance Commissioner Ricardo Lara to block potential surcharges on home insurance policies statewide as a result of the heavy losses suffered by the California Fair Plan after the Pacific Palisades and Altadena fires. In a lawsuit filed in Los Angeles Superior Court on Monday, Consumer Watchdog alleges that Lara violated state law when he reached a deal last year with California's property insurer of last resort that would allow its member insurance companies to charge their policyholders for some of the billions of dollars of Fair Plan losses. The Fair Plan Assn. is run by licensed property and casualty companies to offer insurance to home and business owners who cannot obtain insurance through the commercial market. The insurers backstop its losses and enjoy its profits based on their market share. 'We look forward to defending the rights and pocketbooks of Californians and stopping this socialization of Fair Plan losses at the public's expense, while the Fair Plan's profits will wholly remain with the insurance companies,' Consumer Watchdog staff attorney Ryan Mellino said in a statement. Read more: California's FAIR Plan, the home insurer of last resort, may need a bailout after the L.A. fires The Fair Plan declined to comment on the lawsuit. A representative for Lara did not respond to a request for comment. The Fair Plan has grown rapidly as insurers have pulled out of the state's fire-prone neighborhoods, with its rolls jumping from about 200,000 residential policyholders in 2020 to nearly 560,000 as of March 25. The Los Angeles-based association of insurers has said it expects losses of $4 billion due to the Jan. 7 fires. A state bill would allow the plan to issue bonds to help cover losses, but last month the plan also received approval from Lara to assess its member companies $1 billion to help pay claims — with consumers possibly on the hook for nearly half of that. Last year, Lara reached an agreement with the Fair Plan that would allow losses suffered by the plan that were assessed on its member insurers to be recouped by surcharges on the carriers' statewide residential and commercial insurance policies in an 'extreme worst case scenario" — such as when a disaster caused the plan to run through its reserves, reinsurance and any catastrophe bonds. Read more: L.A. consumer group calls FAIR Plan insurance reforms an industry 'bailout' Insurers would be required to cover up to $2 billion in FAIR Plan claims — $1 billion for residential and $1 billion for commercial claims. They could then temporarily surcharge their own policyholders for half of what they are assessed with Lara's approval. Homeowners would not be surcharged for commercial losses. But the agreement also allows insurers to temporarily surcharge policyholders for 100% of claims in excess of those amounts, with the approval of the insurance commissioner. Consumer Watchdog called the deal an industry "bailout." The Jan. 7 wildfires damaged or destroyed more than 16,000 homes, businesses and other structures, killing at least 30 people. The Fair Plan said the $4 billion in losses caused by the Palisades and Eaton fires, as well as the Hurst fire in the Sylmar area, wiped out its reserves and $5.78 billion in reinsurance — which includes a $900-million deductible and co-payments that raise the plan's cash payouts to $3.5 billion. Lara's decision on Feb. 11 to allow the plan to assess its member carriers for $1 billion in losses did not allow them to immediately surcharge their own customers. Lara must approve the surcharges separately. The lawsuit seeks a court order to stop that. Read more: FAIR Plan to assess insurers $1 billion for L.A. fires; consumers may be on the hook for nearly half Consumer Watchdog alleged in its lawsuit that Lara's actions violated state law because nothing in the 1968 statute that created the Fair Plan contemplated such an assessment on policyholders, among other alleged violations of state law. Lara implemented the new Fair Plan policy last year as part of his Sustainable Insurance Strategy, which seeks to reduce the plan's rolls by giving insurers several policy concessions in the hopes they will write more policies in fire-prone neighborhoods. Read more: Ten victims of the Jan. 7 fires sue the California Fair Plan over smoke damages Those concessions include allowing them to charge policyholders for the cost of reinsurance they buy to protect themselves from catastrophes. Consumer Watchdog contends in its lawsuit that allowing policyholder surcharges will not give insurers more incentive to write more policies in risky neighborhoods. The consumer group's legal action is only the latest lawsuit involving the Fair Plan. Last week, 10 plan policyholders in the Palisades and Eaton fire zones filed a tort claim against the plan, accusing it of failing to investigate or properly compensate for smoke damages. Prior lawsuits have been filed in Los Angeles and statewide with similar smoke-damage claims against the plan. Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights. This story originally appeared in Los Angeles Times.
Los Angeles Times
15-04-2025
- Business
- Los Angeles Times
Consumer group sues insurance commissioner over Fair Plan assessments on state homeowners
A Los Angeles consumer group has sued Insurance Commissioner Ricardo Lara to block potential surcharges on home insurance policies statewide as a result of the heavy losses suffered by the California Fair Plan after the Pacific Palisades and Altadena fires. In a lawsuit filed in Los Angeles Superior Court on Monday, Consumer Watchdog alleges that Lara violated state law when he reached a deal last year with California's property insurer of last resort that would allow its member insurance companies to charge their policyholders for some of the billions of dollars of Fair Plan losses. The Fair Plan Assn. is run by licensed property and casualty companies to offer insurance to home and business owners who cannot obtain insurance through the commercial market. The insurers backstop its losses and enjoy its profits based on their market share. 'We look forward to defending the rights and pocketbooks of Californians and stopping this socialization of Fair Plan losses at the public's expense, while the Fair Plan's profits will wholly remain with the insurance companies,' Consumer Watchdog staff attorney Ryan Mellino said in a statement. The Fair Plan declined to comment on the lawsuit. A representative for Lara did not respond to a request for comment. The Fair Plan has grown rapidly as insurers have pulled out of the state's fire-prone neighborhoods, with its rolls jumping from about 200,000 residential policyholders in 2020 to nearly 560,000 as of March 25. The Los Angeles-based association of insurers has said it expects losses of $4 billion due to the Jan. 7 fires. A state bill would allow the plan to issue bonds to help cover losses, but last month the plan also received approval from Lara to assess its member companies $1 billion to help pay claims — with consumers possibly on the hook for nearly half of that. Last year, Lara reached an agreement with the Fair Plan that would allow losses suffered by the plan that were assessed on its member insurers to be recouped by surcharges on the carriers' statewide residential and commercial insurance policies in an 'extreme worst case scenario' — such as when a disaster caused the plan to run through its reserves, reinsurance and any catastrophe bonds. Insurers would be required to cover up to $2 billion in FAIR Plan claims — $1 billion for residential and $1 billion for commercial claims. They could then temporarily surcharge their own policyholders for half of what they are assessed with Lara's approval. Homeowners would not be surcharged for commercial losses. But the agreement also allows insurers to temporarily surcharge policyholders for 100% of claims in excess of those amounts, with the approval of the insurance commissioner. Consumer Watchdog ha called the deal an industry 'bailout.' The Jan. 7 wildfires damaged or destroyed more than 16,000 homes, businesses and other structures, killing at least 30 people. The Fair Plan said the $4 billion in losses caused by the Palisades and Eaton fires, as well as the Hurst fire in the Sylmar area, wiped out its reserves and $5.78 billion in reinsurance — which includes a $900-million deductible and co-payments that raise the plan's cash payouts to $3.5 billion. Lara's decision on Feb. 11 to allow the plan to assess its member carriers for $1 billion in losses did not allow them to immediately surcharge their own customers. Lara must approve the surcharges separately. The lawsuit seeks a court order to stop that. Consumer Watchdog alleged in its lawsuit that Lara's actions violated state law because nothing in the 1968 statute that created the Fair Plan contemplated such an assessment on policyholders, among other alleged violations of state law. Lara implemented the new Fair Plan policy last year as part of his Sustainable Insurance Strategy, which seeks to reduce the plan's rolls by giving insurers several policy concessions in the hopes they will write more policies in fire-prone neighborhoods. Those concessions include allowing them to charge policyholders for the cost of reinsurance they buy to protect themselves from catastrophes. Consumer Watchdog contends in its lawsuit that allowing policyholder surcharges will not give insurers more incentive to write more policies in risky neighborhoods. The consumer group's legal action is only the latest lawsuit involving the Fair Plan. Last week, 10 plan policyholders in the Palisades and Eaton fire zones filed a tort claim against the plan, accusing it of failing to investigate or properly compensate for smoke damages. Prior lawsuits have been filed in Los Angeles and statewide with similar smoke-damage claims against the plan.
