Latest news with #RicardoLara
Business Mayor
22-05-2025
- Business
- Business Mayor
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 homeowner 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 the 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. Read More Private healthcare boom fuelled by NHS waiting lists '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. skip past newsletter promotion Get the most important US headlines and highlights emailed direct to you every morning Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. 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 customer's first renewal in 2026, according to the Chronicle.
The Guardian
21-05-2025
- Business
- The Guardian
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.
Miami Herald
21-05-2025
- Business
- Miami Herald
State Farm seeks to boost California home insurance rate hike to 30%
A week after winning emergency approval to raise Californians' home insurance premiums, State Farm is seeking to boost that rate hike even higher to 30%. On May 13, the state's largest insurance company got the OK from regulators to increase rates by an average of 17% starting next month. State Farm secured the expedited rate hike after asserting it was in financial distress and expected $7.6 billion in claims arising from the deadly Los Angeles wildfires in January. The "interim" rate increase, however, was only part of a 30% hike the company asked for in June 2024. To reach the full amount, State Farm filed a request Monday for an 11% increase starting next year, on top of the already approved 17% increase. Since the hikes would happen sequentially, they would have the effect of raising rates by 30%. State Farm is also requesting to raise rates by 36% for condos and 52% for renters. The California Department of Insurance said it will hold a public hearing in October to continue gathering information from company officials as they seek to justify the requests. "State Farm wanting a rate increase doesn't change the law," the agency said in a statement. "All rates must be justified so consumers don't pay more than is required." It's unclear exactly how much premiums could go up in the Bay Area or which parts of the region would see the largest rate hikes. Statewide, the insurer covers roughly 15% of homes, totaling more than 1 million customers. When State Farm made its initial 30% request last June, the company asked the insurance department to grant a "variance" to raise premiums higher than usual due to its financial outlook. State Farm General, the company's California-only subsidiary, had issued multiple warnings about its solvency. S&P Global Ratings recently threatened to downgrade the insurer's credit rating, signaling concerns about its financial strength. With the June request still pending, the insurer asked regulators to approve the emergency hike after the devastating fires in Los Angeles County. At the recommendation of an administrative judge, Insurance Commissioner Ricardo Lara last week authorized the 17% hike, slightly less than the 22% the company had requested. In a statement, State Farm said it was "pleased" with Lara's decision but made clear it would continue pursuing the full 30% increase. Consumer advocates, however, said regulators should not have agreed to approve the expedited rate hike - the first time an insurer won such approval in California. They called on the insurance department to closely scrutinize the data that State Farm is now providing to justify another increase. "We've already heard from consumers who are outraged that they just got 17% and now they're asking for more," said Carmen Balber, executive director of Los Angeles-based Consumer Watchdog. State Farm's latest request is the most recent chapter in California's insurance crisis, as providers have ended coverage for hundreds of thousands of policyholders across the state in recent years amid unprecedented wildfire losses. California's insurance rates are closely regulated and, as a result, lower than in many other parts of the country. The insurance industry argues that has left insurers in an untenable situation, even as companies have won approval for repeated rate hikes in recent years. In an attempt to stabilize the faltering home insurance market, state regulators earlier this year finalized a plan that includes allowing insurers to raise rates based on the growing threat of climate change - long an industry demand - in exchange for expanding coverage in parts of the state with the greatest wildfire risk. Consumer advocates, however, contend the plan will lead to huge rate increases and lacks the teeth to force insurers to add homeowners. In the greater Bay Area, insurers who opt into the plan will be expected to write more policies in Marin, Napa and Santa Cruz counties, as well as parts of San Mateo and Sonoma counties and a sliver of Santa Clara County. Insurers would also have to offer new policies for fire-risk homes in suburban areas such as the East Bay Hills and Los Gatos. Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
American Military News
20-05-2025
- Business
- American Military News
Insurers seek to surcharge California homeowners for LA County fire costs
Insurers are seeking to charge homeowners across California for some of the costs of the catastrophic Los Angeles County fires the companies were burdened with when the state's insurer of last resort needed a bailout. The California FAIR Plan Association, with the approval of state Insurance Commissioner Ricardo Lara, assessed its member carriers $1 billion on Feb. 11 when the plan was swamped with thousands of claims after the Jan. 7 fires in Pacific Palisades, Altadena and Sylmar. The plan, operated and backstopped by the state's licensed home insurers, said it has made $2.75 billion in claims payments as of Friday and expects its costs for the fires will total $4 billion, which it could not cover with its limited surplus and reinsurance funds. Now, under a policy Lara put in place last year that is being challenged in court, insurers are filing applications with the state Department of Insurance seeking to surcharge their policyholders statewide for half the costs of that assessment. That means even if a person lives hundreds of miles away from the fires, they could be forced to help pay their insurers' costs of the assessment — on top of annual premiums that have risen hundreds or even thousands of dollars for some homeowners as many insurers have sharply raised rates. So far at least 10 home insurers and their affiliates have filed applications for surcharges, with the fees ranging from about $6 or less for some rental policyholders, $20 or $30 for condo owners and typically $40 to $60 for a standard homeowners policy, though some are less or somewhat more. The insurers are seeking to apply the charges starting this year, with some spreading the charges over two annual billing cycles. Among the insurers that have filed applications are affiliates of AAA and Mercury, two of the largest home insurers in the state, and carriers with smaller market share such as Amica and Western Mutual. Lara has final say about whether to allow the surcharges to go through. 'This modest, temporary cost recovery — just a few dollars a month for most policyholders — is critical to preventing a catastrophic collapse of California's insurance market,' said Denni Ritter, vice president for state government relations for the American Property Casualty Insurance Association trade group. Hilary McLean, a spokesperson for the FAIR Plan, said it has no role in determining how its member carriers decide to pay for assessments. While many of the state's licensed home insurers have yet to file applications, most future surcharges could be in a similar range because the FAIR Plan assessed its member carriers based on their share of California's home insurance market. 'That was the ballpark estimate,' said Rex Frazier, president of the Personal Insurance Federation of California, which represents major property and casualty insurers. But Carmen Balber, executive director of Consumer Watchdog, a Los Angeles-based group that filed the suit to stop the surcharges, said that because the application figures are only averages, homeowners with larger policies could end up paying surcharges totaling hundreds of dollars. 'The average doesn't fully represent the impact on many homeowners, and $50 is not negligible for Californians who have already seen massive home insurance premium increases,' she said, adding that this could be the 'tip of the iceberg' if the FAIR Plan further assesses its member carriers. Michael Soller, a spokesperson for Lara, said regulators are reviewing the applications to ensure they follow the rules established by the department regarding which policyholders are being charged, for how much and for what duration. Insurers must break down the charges by their different lines of insurance. 'We also want to understand each insurer's process to prevent overcollection. It's about fairness, transparency and holding insurance companies within legal bounds,' he said. The FAIR Plan got into financial trouble as insurers fled the state's home insurance market, which was hit with a series of devastating fires even before this year, including the 2018 blaze that nearly wiped out the town of Paradise in Northern California. A Times analysis found that in the Palisades and Eaton fire zones, the FAIR Plan's rolls shot up last year a combined 47%. From 2020 to 2024, the number of homes in both areas on the plan nearly doubled from 14,272 to 28,440. Lara's surcharge policy was instituted as part of his Sustainable Insurance Strategy to make the troubled homeowners market more attractive to insurers. It allows insurers to recoup from their policyholders up to half of any FAIR Plan assessment that totals up to $1 billion for residential losses and $1 billion for commercial losses. Any assessments that exceed those limits can be completely passed on to policyholders. Residential customers are not responsible for commercial losses. However, an additional assessment may not be necessary, according to a Feb. 11 letter sent by the plan to Lara seeking permission for the current assessment on its member carriers. The plan said it was running out of money to pay claims after using up $510 million in unallocated funds and drawing money from its $5.78-billion reinsurance program, acquired by the insurer to spread its risk from fires and other catastrophic events. However, it estimated it would have $306 million in cash after the assessments of its members as of June 30. Frazier said that he had 'no reason to believe' there would be another FAIR Plan assessment related to the Jan. 7 fires, but that another major blaze this year could change the calculus. 'I think the worry is what happens next November or December,' he said. McLean said the FAIR Plan 'cannot speculate on losses associated with future disasters.' A bill working its way through the Legislature would authorize the California Infrastructure and Economic Development Bank to issue bonds on behalf of the FAIR Plan to help pay its claims and increase its liquidity. Consumer Watchdog, which called Lara's decision last year to provide for insurer surcharges an 'industry bailout,' sued Lara in April in Los Angeles County Superior Court claiming that nothing in the 1968 statute that created the Fair Plan contemplated such an assessment on policyholders. It also alleged Lara violated state law by approving the assessment policy via 'administrative fiat' rather through the proper rulemaking procedure. A spokesman for Lara at the time said the lawsuit 'serves to undermine our efforts to restore competition to all areas of our state, so people can get off the Fair Plan and back to the regular market.' The American Property Casualty Insurance Association called it a 'reckless and self-serving stunt.' The state's 10 largest home insurers also were sued last month by a group of Jan. 7 fire victims who allege the companies colluded to drop policyholders and force them into the FAIR Plan, where they would pay more for less coverage. That had the effect of reducing the insurers' liabilities after the fires due to the plan's losses. The American Property Casualty Insurance Association called the lawsuit 'meritless.' ___ © 2025 Los Angeles Times. Distributed by Tribune Content Agency, LLC.
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
