State Farm wins first-ever emergency rate-hike in California

Source: LAist

State Farm can raise homeowners and other rates starting next month, becoming the first insurance company to win approval to do so on an emergency interim basis in California. The state’s largest insurer made the unprecedented request for emergency rate hikes earlier this year, after it said it was in financial distress and expected more than $7 billion in claims because of the Los Angeles County fires in January.

The state Insurance Department staff recommended approval of the company’s request, but the Insurance Commissioner Ricardo Lara asked the company for more information about its finances. He also asked whether the insurer could return to its parent company, State Farm Mutual, for help. Lara then conditionally approved but punted the official decision to a judge, who oversaw a three-day public hearing last month to consider the proposed agreement between the department and the insurer. The judge released the decision on Tuesday. The decision means State Farm can raise its rates an average of 17 percent for homeowners, 15 percent for renters and condominiums, and 38 percent for rental dwellings starting June 1.