The largest insurer in California is asking state regulators to approve a 22% rate increase, citing mounting wildfire losses that have already cost over $1 billion in claims.
Anna Phillips reports for The Washington Post.
In short:
- State Farm says the recent Los Angeles fires are the most expensive in company history and could further weaken its finances, which have already led to a credit downgrade.
- The company has paid out over $1 billion in claims from the fires and expects to pay much more, warning that failure to raise rates could put 2.8 million policies at risk.
- California law requires regulatory approval for rate hikes over 7%, and previous insurer exits from the state have pushed many homeowners to rely on the state-backed Fair Plan.
Key quote:
“Insurance will cost more for customers in California going forward because the risk is greater in California.”
— State Farm statement
Why this matters:
Wildfires are becoming more frequent and severe, driving up insurance costs and leaving homeowners with fewer coverage options. If insurers continue withdrawing from high-risk areas, more residents may struggle to find affordable insurance, threatening financial stability in fire-prone communities.
Related: California plans significant changes to insurance rules as wildfires increase risk
