State Farm Reduces its California Rate Request

State Farm General asked for — and received — a 21.8% rate increase for homeowners insurance policies from the California Department of Insurance. The blowback of the decision was highly negative.

At a public hearing on the matter, State Farm agreed to drop the request to 17%.

The main reason State Farm General agreed to 17% is because the parent company, State Farm, said it would put $500 million in capital into State Farm General to offset its rate hike problems. 

California Department of Insurance attorney, Nikki McKennedy asked Administrative Law Judge Karl-Fredric Seligman to agree to the revised rate and the conditions related to the revision. She said State Farm General, California’s largest homeowners insurer, is facing heavy financial conditions. To fail to agree to a rate hike could mean the company will drop more insureds and disrupt coverage for more Californians.

State Farm General economist, David Appel took it a step farther and said denying the rate request would cause State Farm General to leave the state’s homeowners market altogether. Appel recommended at least approving the rate increase temporarily with a hearing on a full rate increase to happen later.

If approved, the increase will go into effect on June 1st.

Source link: Insurance Business America — https://bit.ly/3RWNJN3