It wasn’t enough for State Farm General to win approval to hike homeowner rates by 17 percent this month. Now the insurer wants to jack up rates by another 13 percent.
The unit of Illinois-based State Farm Mutual Automobile Insurance seeks a 30 percent increase in home insurance premiums because of claims tied to the Los Angeles County firestorms, the San Jose Mercury News reported.
The state’s largest insurer got the nod from regulators on May 13 to temporarily boost rates by an average of 17 percent, less than the nearly 22 percent the company requested, starting next month.
State Farm secured the expedited rate hike after claiming it was in financial trouble because of $7.6 billion in expected claims arising from January’s deadly wildfires around the Pacific Palisades and Altadena, which destroyed 12,000 homes.
The “interim” rate increase, however, was only part of a 30 percent hike the company sought in June.
To reach that amount, State Farm filed a request for an 11 percent increase starting next year, on top of the approved 17 percent jump. Since the hikes would happen sequentially, they would have the effect of raising rates by 30 percent, according to the Mercury News.
State Farm is also asking to raise rates by 36 percent for condominiums and 52 percent for renters. Statewide, the insurer covers 15 percent of all homes, with more than 1 million customers.
The California Department of Insurance said it will hold a public hearing in October to dredge more information from company officials who seek to justify the requested hikes.
“State Farm wanting a rate increase doesn’t change the law,” the agency said in a statement. “All rates must be justified so consumers don’t pay more than is required.”
When State Farm made its initial 30 percent request last June, it asked the insurance department to grant a “variance” to raise premiums higher than usual because of its financial outlook. State Farm General had issued multiple warnings about going broke.
State Farm said it was “pleased” with the 17 percent boost, but made clear it would pursue the full 30 percent increase.
Consumer advocates said regulators should not have agreed to approve the expedited rate hike — the first time an insurer won such approval in California. They called on the insurance department to scrutinize the data that State Farm is providing to justify another rate jump.
“We’ve already heard from consumers who are outraged that they just got 17 percent and now they’re asking for more,” Carmen Balber, executive director of Los Angeles-based Consumer Watchdog, told the Mercury News.
State Farm’s latest request is the latest wrinkle in a state insurance crisis, as providers have cancelled for policyholders across the state in recent years after unprecedented wildfire losses.