State Farm, a major insurance company, has received approval to raise homeowner insurance rates in California by 20% in the coming year, according to records from the Department of Insurance. This decision follows a trend of challenges in the state’s insurance market, with fewer options and higher prices due to major companies pausing or restricting new business.
State Farm’s Rate Hike in California
State Farm, holding over 20% of homeowner policies in California in 2022, is set to increase its average rate by 20%, approved by the Department of Insurance. The rise comes amid a challenging time for the state’s insurance market, marked by limited options and increased prices due to business restrictions by major companies.
State Farm had previously halted new applications for property and business policies in May, citing financial concerns related to higher construction costs, wildfire risks, and internal business insurance challenges. The recently approved rate change is attributed to increased costs and risks, according to a company spokesperson.
The California Insurance Commissioner, Ricardo Lara, has proposed policy actions, including using computer models for better planning and incentivizing companies to insure high wildfire-risk areas. However, the details are pending finalization, and new regulations need approval. Lara acknowledges ongoing uncertainty in insurance pricing and availability.
READ ALSO: Arkansas had 35.6 mortgage refinances per 1,000 households in 2022, below the national average.
Approval Process and Industry Perspectives
State Farm’s rate change request was submitted in February and approved in December, sparking discussions about the approval process duration. Industry representatives, like Rex Frazier, suggest the current system contributes to delays, while Insurance Commissioner Lara contends that incomplete applications from companies also play a role.
The Personal Insurance Federation of California emphasizes the need for quicker approval of rate changes. Consumer Watchdog, an organization intervening in rate cases, did so in this instance. Although they eventually agreed to the increase, they expressed frustration over the limited information received from State Farm to justify the hike.
In summary, State Farm’s approved rate increase in California reflects challenges in the state’s insurance market, with ongoing debates about the approval process and the industry’s desire for faster decisions. Consumer Watchdog, while agreeing to the increase, highlights concerns about the transparency of information provided by State Farm.
READ ALSO: Georgia Tax Revenue Sees Sharp Decline in October, Impacting State Finances
Leave a Reply