‘Unprecedented times call for decisive action’: Commissioner Lara acts to protect policyholders in State Farm emergency rate request
News: 2025 Press Release
LOS ANGELES — In an effort to safeguard Californians during the ongoing insurance crisis and stabilize the market, Insurance Commissioner Ricardo Lara has provisionally approved State Farm’s request for an emergency interim rate increase following recent devastating wildfires only if the company can justify it with data in a public hearing scheduled for April 8, 2025.
Additionally, this week Commissioner Lara called on State Farm to halt non-renewals and pursue a $500 million capital infusion from its parent company to restore financial stability. He presented this proposal during a meeting with State Farm representatives, the Department of Insurance, and the intervenor in this matter. The transcript of that meeting has been released today.
For months, the Department of Insurance staff have engaged in informal discussions with State Farm and the intervenor, to reach a resolution regarding State Farm’s request for increased rates. However, the parties did not reach an agreement, with State Farm asserting that its financial situation has deteriorated. State Farm then reached out directly to Commissioner Lara requesting an emergency interim rate increase.
Commissioner Lara’s actions follow an unprecedented meeting at the Department of Insurance’s Oakland office on February 26, 2025. During this meeting, State Farm informed the Commissioner that while it can cover claims from the Southern California wildfires, the disaster has worsened its financial condition. Commissioner Lara has pressed the state’s largest home insurer for a plan to improve its financial standing and maintain its commitment to its more than 1 million California homeowner customers.
Commissioner Lara issued the following statement regarding his actions:
“The role of Insurance Commissioner involves balancing a stable and sustainable insurance market that serves consumers with effective oversight. To ensure long-term choices for Californians, I had to make an unprecedented decision in the short term.
“State Farm claims it is committed to its California customers and aims to restore financial stability. I expect both State Farm and its parent company to meet their responsibilities and not shift the burden entirely onto their customers. The facts will be revealed in an open, transparent hearing.
“Currently, too many Californians live in fear of having their insurance policies non-renewed. This anxiety perpetuates misinformation and discourages consumers from accessing their entitled benefits. This situation is unacceptable. I will remain vigilant in ensuring that State Farm processes claims fairly, fully, and promptly, and stands by its California customers.
“To resolve this matter, I am ordering State Farm to respond to questions in an official hearing, promoting transparency and a path forward. It is evident that other California insurers are unable to absorb State Farm’s existing customers, which poses a significant risk of these customers ending up on the FAIR Plan—a scenario we all wish to avoid as my Sustainable Insurance Strategy is implemented.
"We will finally get to the bottom of State Farm's financial condition. I am confident that my approach will provide Californians with greater choices in a competitive and stable insurance market - exactly what they deserve."
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Media Notes:
- Commissioner Lara’s order granting State Farm provisional approval for emergency rate increases and ordering a rate hearing.
- Provisional rate increases are pending the result of the rate hearing scheduled for April 8: 21.8% for Non-Tenant homeowners, 15% for Tenants (Renters), 15% for Tenants (Condominium Unitowners), and 38% for Rental Dwelling.
- Despite multiple approved rate increases, State Farm stopped writing new policies in California and non-renewed thousands of existing policies, raising serious questions about its financial situation.
- Rate hearings authorized under Proposition 103 are extremely rare. State Farm was also the subject of the most recent rate hearing in 2015.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
