California's largest home insurer has some not-great news for homeowners. On Monday, State Farm General, which currently insures about a million homes in the state, said it was asking the California Department of Insurance to OK an emergency rate increase as a result of the recent Los Angeles wildfires, with an average 22% hike for policyholders, reports the Guardian. The company notes in a release that it has already received close to 9,000 claims and paid out $1 billion, with expectations it will pay out "significantly more" as additional claims filter in.
State Farm notes that if its capital continues to be depleted, it may be hampered in paying out insurance overall. "Insurance will cost more for customers in California going forward because the risk is greater in California," says the company, which stopped writing most new policies in the state in 2023. "We must appropriately match price to risk. That is foundational to how insurance works. Higher risks should pay more for insurance than lower risks."
State Farm says it has lost $2.8 billion over the last decade or so, and that its financial rating was recently downgraded, per the Los Angeles Times. But critics aren't so sure State Farm is actually hurting for cash: The Consumer Watchdog nonprofit says the company pulled in underwriting profits of $1.4 billion from 2020 to 2023. "Filling State Farm's bank accounts shouldn't fall on the backs of California homeowners recovering from disaster," the advocacy group tells the Times.
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