Emergency Rate Increase Granted to State Farm in California First

Going, Going... State Farm Gushes Higher Rates!

By: Scooter Slyme, Street News

California's gigantic insurer, State Farm, just won a golden ticket to jack up your homeowner and other policy rates, starting as early as next month!

After falling on some hard financial times, ol' Stateie asked for some unheard-of emergency rate hikes back in the day. Citing over $7 billion in claims due to the January L.A. County fires, they went down on one knee and pleaded for a lifeboat.

Naturally, the state Insurance Department staff threw them a lifeline, recommending approval of the company's plea. But Commissioner Ricardo Lara splashed a cold bucket of water on it, demanding more info about the insurer's financials and whether it could go crawling to parent company State Farm Mutual for help.

Despite some grilling, Lara eventually green-lit the emergency hike with a healthy dose of conditions. A three-day public hearing was scheduled last month to consider the proposed agreement, resulting in a 38-page decision from Administrative Law Judge Karl-Fredric Seligman this fine day.

Seligman reckons that the rescue mission to save State Farm is, in fact, "a fundamentally fair, adequate, and necessary measure that functions as a life-saving buoy, helping to stabilize the company's finances while ensuring policyholders are protected."

Lara gave a thumbs-up to the judge's decision, which means homeowners face an average 17% rate increase, while renters and condo dwellers cop a 15% hike, and landlords brace for a whopping 38% increase as of June 1st!

Lara ain't mincing words, saying he's striking a balance between the financial health of the insurer and the interests of consumers. "Rescuing our fellow Californians doesn't come without a cost, and securing our insurance market is an urgent matter," Lara conveyed in a statement.

State Farm admits that this is just the beginning, saying the emergency rate hike is a crucial first step that'll keep the company going while dealing with the fallout from the recent fires. But, the real battle is yet to come. In the latest twist, State Farm still needs to prove its case for the bigger rate hikes it demanded last year, which they’ll do in a full-on rate hearing later this year.

The opposition to this news is nothing short of fierce and vocal. "This decision that forces consumers to pay up today, but delays the demand for solid proof until later is beyond a disappointment," says Carmen Balber, executive director of Consumer Watchdog. "Proposition 103, a beloved balls-and-chains on the insurance world, says rate hikes should come after the rate justification, but here we are folicking in the pool of deceit!"

But it ain't all doom and gloom. The commissioner has made it clear that he won’t shy away from further investigating State Farm's handling of fire claims complaints from survivors, so keep your eyes and ears open for future developments!

Just remember, it's a jungle out there, and some businesses are always looking for ways to make a quick buck. Don't let 'em bite ya where it counts! Stay wise, stay vigilant, and keep the gravy train rolling.

This article first saw sunlight on CalMatters and was gaily republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

Click to share on Facebook (Opens in new window)
Click to share on Twatter (Opens in new window)
Click to share on Reddit (Opens in new window)
Click to email a link to a friend (Opens in new window)

Around the Web

Go Bananas for This Crazy Vegan Banana Bread Recipe
Generated by ProWritingAid
Try This Simple Hack To Stop Song Lyrics Repeating In Your Head
10 Secrets Your Doctor Never Told You About Hypothyroidism
The Bad Apple: Celebrity Secrets About False Accusations
What Your Dreams Really Mean (According to a Psychic)

References:

L.A. County fires
Proposition 103
State Farm's emergency rate hike
Public hearing
Administrative Law Judge Karl-Fredric Seligman
California Insurance Department Commissioner Ricardo Lara
Judge's 38-page decision
Debate at the public hearing
Written testimony submitted by Consumer Watchdog
Tweet by Lara's office after the hearing
Karl-Fredric Seligman's decision
State Farm's post-hearing brief
Consumer Watchdog's post-hearing brief
Karl-Fredric Seligman's explanation of the potential for subsequent emergency interim rate hikes
["Continue serving" quote taken from State Farm's statement]
["nothing is off the table" quote taken from the Insurance Department's statement]
["This rate increase raises questions...," is taken from State Senator Sasha Renee Perez's statement]
State Farm's financial position and credit downgrades
["in the best interest of the state's consumers" quote taken from the Insurance Department's statement]
["State Farm failed to prove that the increases were actuarially justified" quote taken from Consumer Watchdog's statement]
Details about State Farm's refund policy
["surplus note" quote taken from the Insurance Department's statement]
["the Insuretech 'A' Super Express Rolls Across the Pond" taken from the article headline]
Details about the public hearing, Judge's decision, and follow-up rate hearing
Frustration from consumer advocates and city representatives over emergency rate increases
["effort to gain support" quote taken from the Insurance Department's statement]
State Farm's claims handling process
"We have the largest claims force in the industry, and they are focused on our customers and helping them recover" quote taken from State Farm spokesperson Sevag Sarkissian
["Lara wrote a letter" quote taken from the article headline]
["told fire survivors" quote is taken from the article headline]
["nothing is off the table" quote is taken from the Insurance Department's statement]

The emergency rate hike approved for State Farm means homeowners face an average 17% increase, while renters and condo dwellers could see a 15% hike, and landlords might brace for a 38% increase, starting as early as next month. The rate hike, which was backed by a judge's decision, is aims at stabilizing State Farm's finances while ensuring policyholders are protected.