California Insurance Commissioner Ricardo Lara on Tuesday approved a judge’s ruling granting State Farm’s request for a 17% interim rate increase for homeowners policies.
State Farm, California’s largest insurer, initially asked for a 21.8% emergency rate hike in February.
Renter/condominium tenant insurance from State Farm also will go up 15%, and rental dwelling policies will rise 38%, according to the Judge Karl Seligman’s May 12 ruling in Oakland.
In a further move to reinforce the company’s solvency, State Farm is required to secure $400 million from its parent company State Farm General Insurance Co.
State Farm has agreed to refrain from not renewing policies through the end of this year.
The emergency rate increase takes effect June 1, with a full rate hearing scheduled to start at a date determined by the judge.
In March Lara called for an administrative law judge to review the evidence and make a proposed decision on State Farm’s requested rate increases. Under state law, however, Lara is the ultimate decision-maker.
Following a three-day hearing April 8-10, the Seligman found that “the evidence presented in the hearing established a prima facie showing that State Farm is experiencing extraordinary financial distress, coupled with surplus depletion that threatens ongoing business operations,” the judge wrote. “While the interim rates remain temporary and subject to further review, the stipulation seeks to balance consumer protections with the need for financial stability.”
Lara issued a statement after the ruling.
“Californians deserve a process grounded in fairness, transparency, and integrity — not politics or posturing,” he said. “That is why I requested an independent review of the evidence by an administrative law judge, who presented a proposed decision. I ordered this hearing to ensure that the parties have the opportunity to present their arguments before a neutral arbiter. …
“Let me be clear: We are in a statewide insurance crisis, affecting millions of Californians,” Lara continued. “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.
“I expect State Farm provide the highest level of service to its California customers and to fulfill its promises,” Lara said. “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. I am focused on ensuring that State Farm pays its claims to wildfire survivors fully and fairly — and nothing is off the table.”
State Farm also issued a statement following the commissioner’s approval.
“(State Farm General) will continue to evaluate its business as conditions change and is pausing new group non-renewals throughout 2025 for non-tenant homeowners; tenants — renters; tenants — condominium unitowners; and rental dwelling properties.
“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,” the statement continued. “We thank the Commissioner for this approval and look forward to continuing to work with the Commissioner and others on a more sustainable insurance market in California.”
Lara’s rate approval is available on the Insurance Department’s website.
The judge’s proposed order is also online.
