Posted on 02/03/2025 4:12:49 PM PST by Angelino97
State Farm General, the largest home insurer in California, sent a desperate letter to the state government requesting it immediately approve emergency price hikes to its insurance policies in the wake of the destructive Los Angeles fires.
On Monday, the company sent a four-page letter to the California Department of Insurance pleading with regulators to allow an average rate increase of 22 percent for homeowners.
State Farm, a California-based subsidiary of the much larger State Farm Mutual Automobile Insurance Company, also wants to be able to slap condo owners and renters with a 15 percent increase.
Those who rent out units to tenants should be hit with a 38 percent increase, according to the letter, which was signed by top-level executives at the company including CEO Dan Krause.
'We are requesting that you take emergency action to help protect California’s fragile insurance market by immediately approving interim rate increases...with rates to be effective May 1, 2025,' the letter read.
State Farm General justified this by saying it had received more than 8,700 claims related to the wildfires as of February 1 and has now paid over $1 billion to customers as a result.
State Farm General's policyholder surplus, the amount it has available to pay out claims, was at just $1.04 billion at the start of 2024, according to data reviewed by The San Francisco Chronicle.
'State Farm General will ultimately pay out significantly more, as collectively these fires will be the costliest disasters in the history of State Farm General,' the company wrote in the letter...
The California Department of Insurance responded with a statement after State Farm General released the letter, though didn't reveal what its decision on a rate increase would be.
(Excerpt) Read more at dailymail.co.uk ...
State Farm is NOT asking for a "bailout."
It's asking for permission to raise their rates.
That’s right. A rate increase is not a bailout.
Many of those people who lost their homes are in deep trouble.
I’m shocked that they asking for such a small increase.
The numbers I saw suggest that State Farm is paying out $1.50 in claims for every $1.00 in policies that they underwrite which is not a sustainable business model
The claims could be made and claims settled for a house on a side hill. The owner thinks well I’ll go rebuild on my lot. Then it rains a bunch, he goes up and his lot is at the bottom of the hill after wiping out a down hills neighbor’s house and he’s suing you for damages. You know people, this is going to be uglier than a bucket of buttholes before it over. Just saying.
An ‘interim’ rate increase. Before the actual rate increase hits. Whereupon I will likely leave California, as I do not want to own uninsured property.
The owner thinks he’ll rebuild on his lot, and then dive into the permit process. During the 2 years that THAT takes, his slab takes out the other house.
Excellent points. And the rain IS coming. :(
Expect to hear from more insurance companies.
Yesterday, a friend’s son, who is pretty high up The Food Chain at American Family Insurance said that AmFam is going to be in a world of hurt over this.
Many news reports say that the state and city are both waiving permit requirements to "fast-track" rebuilding.
I wonder if they wrote similar letters when CA put the rate caps moratorium on them.
What a mess.
Only a 22$ increase? I am betting State Farm General will be exiting the state as soon as the claims mess from the wildfires is cleaned up. Probably others too.
I don’t expect any of the big insurance companies to even be in California by next year. The risk is just too high in a State ran by morons.
Many news reports say that the state and city are both waiving permit requirements to “fast-track” rebuilding.
Isn’t that what Pres Trump ordered them to do?
White Jake could handle this. (/s)
How much longer are we going to reimburse the fools who run the California government. And some areas by dry hillsides should be self-insured. Too bad!
For years the State has not allowed insurers to increase rates at all commensurate with inflation and, so, the insurers do not have a viable business model.
Credit belongs to the fact that lots of rich leftists lost homes in Malibu and the Palisades. When they complain, Sacramento listens.
Why do you think the film industry gets so many tax breaks in California? When rich leftists want tax breaks, Sacramento suddenly understands economic incentives.
Liberals couldn’t manage a lemonade stand much less a US State. Embrace the suck, RATs.
“State Farm General justified this by saying it had received more than 8,700 claims related to the wildfires as of February 1 and has now paid over $1 billion to customers as a result.
“State Farm General’s policyholder surplus, the amount it has available to pay out claims, was at just $1.04 billion at the start of 2024, according to data reviewed by The San Francisco Chronicle.”
I would assume that because the houses are in affluent areas that they are going to cost more than the average California house (~$500,000) to rebuild.
State Farm General may have reinsurance, but I think it would need more than $4 billion in reinsurance to survive.
If it wants to sell more policies, it had better reassume potential policy buyers ASAP.
California to insurer:
Go into mindfulness meditation and get in touch with the spiritual dimension and let the crass commercialism drift away. Life is not meant to be for moneymaking and competition to be first.
New Age author Stuart Wilde (1946-2013; author of Silent Power) wrote:
“If some guy rushes up and wants to cut in line ahead of you, let him. Don’t let that stuff be important to you.”
He owned a clothes store on Carnaby Street during the Swinging Sixties and did well.
He was once considering a career change to begin to write New Age books and to do speaking tours. He went walking in England through a residential neighborhood with which he was not familiar, going over the decision’s pros and cons.
The only commercial place around was a quaint and old little book store. He went in and browsed. At the end of a long row was an open book sitting on a bookshelf. He got closer and was curious so picked it up.
The top line was: “And in those days a wild man spoke to masses of people and they listened to him and liked him.”
The closeness to his name Wilde made him decide to make the change.
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