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CA Department of Insurance

Department issues Notice of Noncompliance after State Farm refuses to comply with Commissioner’s order

News: 2017 Press Release

For Release: January 15, 2017
Media Calls Only: 916-492-3566
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Department issues Notice of Noncompliance after State Farm refuses to comply with Commissioner’s order
Thousands of policyholders denied rate reduction daily

SACRAMENTO, Calif. — The California Department of Insurance today issued a Notice of Noncompliance charging State Farm General Insurance Company with refusing to reduce policyholders’ rates, as mandated by Insurance Commissioner Dave Jones’ order, effective December 8, 2016. 

Commissioner Jones’ order issued in November directed State Farm to reduce homeowners’ and renters’ rates by seven percent overall, amounting to approximately $84 million in savings to consumers over the next year, and issue refunds totaling more than $110 million to State Farm's policyholders. State Farm has filed multiple requests to stay this order.

On December 16, 2016, the San Diego Superior Court denied State Farm's request to stay part of the Commissioner’s order that directed State Farm to reduce its homeowners’ and renters’ rates going forward, on the basis that delaying these rate reductions would be against the public interest. The decision means State Farm must decrease its rates pursuant to Commissioner's order effective December 8, 2016.

State Farm informed department staff that it is not planning to implement the rate reduction order until February 13, 2017, because it asserts that an additional 50 days is required to issue renewal notices. To date, State Farm has refused to reduce rates for both policyholders who purchase or renew policies with State Farm from December 13, 2016 to February 13, 2017.

“I expect every insurance company to comply with my rate orders,” said Commissioner Jones. “The orders I issue under Proposition 103 ensure that Californians do not pay excessive rates.”

Based on the number of State Farm’s ratepayers, the department anticipates that the number of policyholders affected by State Farm’s refusal to timely implement the rate reduction could be in excess of 4,000 ratepayers each day from December 8, 2016 to February 13, 2017.

Jones ordered the rate reduction after considering voluminous evidence and actuarial analyses that were presented during a lengthy public hearing process, which revealed State Farm’s rates were excessive and unjustified. 

State Farm originally requested a rate increase of 6.9 percent. Based on the evidence presented during a public hearing, however, Commissioner Jones determined that the rates State Farm is currently charging are excessive. Specifically, Jones ordered State Farm to reduce its homeowners’ insurance rates by an average of 5.37 percent, its renters’ insurance rates by an average of 20.39 percent, and its condominium insurance rates by an average of 13.81 percent -- for a weighted average of 7.0 percent reduction overall.


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Media Notes:

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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