California Farmers Insurance Claims California Approved Emergency 22% Premium Increase

After the catastrophic wildfires in Los Angeles County last month, California’s largest housing insurance company, State Farm, has received thousands of claims for compensation. On Monday, February 3rd, the company filed an application with the California Insurance Department requesting approval for a 22% increase in premiums.

In a press release on Monday, the company stated that State Farm helps people recover from accidents, “that’s what we do after wildfires.”

Following the Palisades Fire and Eaton Canyon Fire that broke out on January 7th, as of February 1st, State Farm had received over 8,700 homeowner claims and paid out over $1 billion in compensation to affected customers.

These two fires have resulted in at least 29 fatalities and destroyed over 16,000 homes and other structures, making them one of the most devastating wildfires in California’s history.

According to AccuWeather estimates, the losses from the fires and economic damages are expected to exceed $250 billion, surpassing the losses from the entire 2020 California wildfire season.

State Farm Insurance estimates that the final amount of compensation they pay out will be even higher, making these two fires one of the costliest disasters in the company’s history.

State Farm has requested immediate approval from the California Insurance Department to temporarily raise premiums to assist over 2.8 million policyholders in California (including 1 million homeowner clients) to avoid being in “dire straits.”

If approved, the proposed premium increase will take effect on May 1st for renewing customers, as stated by the company.

In their statement, State Farm mentioned that due to higher risks in California, premiums for California customers will be higher in the future.

This premium increase will help State Farm rebuild its depleted capital. The company noted that insufficient capital could result in credit rating agencies downgrading them, putting at risk mortgage support for housing insurance policyholders.

State Farm stated that over the past nine years, for every $1 collected from California homeowners, they have spent $1.26, leading to insurance losses exceeding $5 billion.

In January 2024, State Farm had previously received approval for a 20% premium hike from the California Insurance Department, which applied to renewing homeowner policies.

Back in 2023, the company had announced plans to discontinue new home and accidental insurance business but would continue to offer new auto insurance policies in California.

Another major insurance company, Allstate, has also ceased issuing new commercial real estate and residential policies. Other insurance companies have followed suit, attributing the responsibility to California regulations restricting the extent of premium increases.

The California Insurance Department did not immediately respond to Epoch Times’ request for comments.

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