State Farm seeking massive rate hikes in California as state's insurance crisis escalates
State Farm is looking to raise insurance rates for some California customers by more than 50% as the insurance giant weighs its future in The Golden State.
In a filing to the California Department of Insurance, the company's subsidiary in the state requested to hike homeowners insurance policies by 30%, condo policies by 36%, and renter's policies by a whopping 52%.
"State Farm General Insurance Company ("State Farm General") is working toward its long-term sustainability in California," the company told FOX Business in a statement. "Rate changes are driven by increased costs and risk and are necessary for State Farm General to deliver on the promises the Company makes every day to its customers."
State Farm is California's largest home insurance provider, and the company has made a number of moves in recent years to pull back on its exposure in the state.
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The insurance giant announced last year that it would stop accepting new home insurance applications in California due to "historic" increases in construction costs and inflation.
Then in March, the company said that it would cut 72,000 home and apartment policies in the state because of inflation, regulatory costs and increasing risks from catastrophes. California's insurance commissioner, Ricardo Lara, referred to the situation as "a crisis" at the time, and is now raising further concerns following the company's new request for rate hikes.
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"State Farm General’s latest rate filings raise serious questions about its financial condition," Lara said in a statement. "This has the potential to affect millions of California consumers and the integrity of our residential property insurance market."
Lara emphasized that the rate increases would have to be approved by the California Department of Insurance. The DOI approved a 6.9% rate increase for State Farm in January 2023, and an intervenor group approved a 20% rate hike for State Farm homeowners and condo policies in December.
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"We will use all the Department’s investigatory tools to get to the bottom of State Farm’s financial situation," Lara reiterated. "We take this process seriously."
FOX Business' Chris Pandolfo contributed to this report.