CDI Commissioner Ricardo Lara (Photo: Kevin Sanders for California Globe)
Insurance Commissioner Lara Approves 17% State Farm Rate Hike
Approval comes following pk by judge given only hours before
By Evan Symon, May 14, 2025 2:45 am
California Department of Insurance (CDI) Commissioner Ricardo Lara gave a final sign off on the controversial 17% rate hike sought by State Farm Insurance on Tuesday, following a court decision okaying the rate increase earlier in the day.
According to a statement issued by Lara, State Farm will need to secure a $400 million surplus note from its parent company to help back it’s financial situation in the state which, in turn, the company will get permission to install an emergency 17% rate increase. In addition, State Farm cannot remove any policyholders through non-renewal programs through the end of 2025.
Earlier on Tuesday, an Administrative Hearing Bureau judge set down his ruling on the matter, approving the rate and the stipulations on State Farm as a way to protect homeowners and renters with policies while also keeping State Farm afloat after they made record payouts for lost homes following the Palisades Fire and Eaton Fire in January.
“While the interim rates remain temporary and subject to further review, the stipulation seeks to balance consumer protections with the need for financial stability,” wrote Judge Karl-Fredric Seligman. “A full rate hearing serves as a critical signal to the marketplace that emergency rate requests of the type State Farm advanced are serious and will undergo rigorous scrutiny. Applicants seeking such measures must be prepared to substantiate their claims through the hearing process, reinforcing the importance of transparency, evidence-based decision-making, and Commissioner’s regulatory oversight.”
With the court finally giving their blessing and no more hurdles ahead, Lara formally adopted the rate hike and stipulations only hours later.
“Californians deserve a process grounded in fairness, transparency, and integrity — not politics or posturing. That is why I requested an independent review of the evidence by an administrative law judge, who presented a proposed decision. I ordered this hearing to ensure that the parties have the opportunity to present their arguments before a neutral arbiter,” explained Lara.
“I am balancing all the facts. Protecting all State Farm customers and the integrity of our insurance market is an urgent matter. Let me be clear: We are in a statewide insurance crisis, affecting millions of Californians. Taking this on requires tough decisions. This is not a game. This is not a media-driven moment for some to exploit — this impacts people I am committed to protecting.
“I expect State Farm provide the highest level of service to its California customers and to fulfill its promises. State Farm must now justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my Department’s experts. I am focused on ensuring that State Farm pays its claims to wildfire survivors fully and fairly – and nothing is off the table.”
An approved rate hike
For the past few years, State Farm, like other insurance companies in California, has drastically increased insurance rates and has began limiting who they cover within the state. This has included State Farm raising auto insurance rates in March 2023, announcing that they would no longer be accepting new applications for any kind of insurance other than personal vehicle insurance in May 2023, a 20% home insurance rate increase in January 2024, removing 72,000 insurance policies in the state, roughly 2% of their total number in California, in March 2024, and a big 50% rate increase request coming in July 2024.
While the insurance situation seemed to have improved at the beginning of the year, this was upended by the wildfires in Los Angeles. Combined, the Eaton and Palisades Fires caused 30 deaths, 16,255 destroyed structures and a further 2,088 damaged structures. With so many homes and rental buildings either destroyed or damaged, insurance companies were suddenly flooded with tons of claims. No company was expecting so many claims, especially total loss claims, to come at once. This included State Farm who sought an emergency rate hike of 22%. When broken down, the company seeks an increase of 22% for non-tenant homeowners, 15% for renters and condominium owners, and up to 38% for rental dwellings.
Insurance Commissioner Ricardo Lara, who initially signaled that he might not approve the request, conditionally approved the requested 22% insurance rate hike in March, but with the caveat of State Farm having to justify their reasons for an increase at a public hearing in April. On Tuesday, public hearings finally began.
State Farm said that the large rate hike was necessary as the large scale of the fire caused over $1 billion being paid out by February 1st. With huge losses mounting for the company, they said that the rate hike would help rebuild their finances and avoid dropping even more policyholders in the state than they already have. In testimony on Tuesday, State Farm revealed that their company surplus has gone from $4 billion in 2015 to only $600 million in 2024. They also revealed that they would no longer be pursuing a 22% rate increase, but now only a 17% increase. This was all laid out in a tense public hearing last month, where insurance watchdogs and members of the public blasted the CDI and Lara for favoring insurance companies over the people, and claiming that the companies were gouging customers in their time of need.
Even with severe public scrutiny hanging over the proposed rate, the court and Lara nonetheless signed off on it. As expected, consumers groups came out against the decision and vowed to find more ways to fight it, especially if other companies followed and tried to do the same thing.
“Today’s decision that would make consumers pay now but allow State Farm to wait months before having to show its math is a great disappointment for consumers,” said Consumer Watchdog executive director Carmen Balber. “Voter-approved Proposition 103 says a rate hike shouldn’t come before the rate justification, but that’s what happened here.”
“That’s exactly the problem,” added Eaton Fire Survivors Network spokeswoman Joy Chen. “Approving this rate hike without reviewing State Farm’s conduct would send a chilling message to every Californian: You can pay your premiums — but don’t count on your insurer when disaster strikes.”
With the approved hike approved, State Farm became the first company in the state to receive an emergency hike. As of Tuesday evening it is unknown if other companies will attempt similar hikes in the near future.
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“Californians deserve a process grounded in fairness, transparency, and integrity — not politics or posturing. That is why I requested an independent review of the evidence by an administrative law judge, who presented a proposed decision. I ordered this hearing to ensure that the parties have the opportunity to present their arguments before a neutral arbiter,” explained Lara.”
Translation: I don’t have a friggin’ CLUE about anything to do with actuarial science, risk modeling, financial analysis or business management, so I pawned off the review of this approval to an administrative law judge, thereby shielding me from having my lack of experience exposed, and enabling me to pass the political buck as I attempt to FAIL UPWARDS….
It’s the California Democrat way….FAIL UPWARDS, and WE PAY FOR THEIR STUPIDITY….
State Farm ain’t exactly INNOCENT here either… maybe they could cut back on the number of Kansas City Chiefs commercials and focus on PAYING OUT TO THEIR CUSTOMERS, rather than constantly SHILLING to attract MORE customers….
Pro Tip: Do your homework and go with an insurance company that DOES NOT ADVERTISE A LOT ON TEEVEE, and focuses more on their FINANCES and less on their MARKETING…..
Exactly. SF and other insurance companies are Not innocent bystanders.
Asking for a friend : Why don’t these insurance companies CHALLENGE the California Democrats and the CARB lackeys IN COURT for NOT ENABLING FUEL MANAGEMENT and RISK MITIGATION, rather than throwing campaign contributions at their lapdog candidates???
Anyone? Anyone???
How many TONS of toxic pollution did the Palisades and Eaton fires throw into the atmosphere, vs the smoke that controlled burns would have?
How many THOUSANDS of TONS of toxic FIRE DEBRIS is being DUMPED on local dumps that were NOT AFFECTED by the fires??? Is this the Democrat’s way of “spreading the risk”??? DUMP AFTER the fact???
Of course Ricardo Lara rubber-stamped State Farm’s rate increase request. (And this is the second one this year, right?) He’s a corrupt state office holder who is in the insurance companies’ pockets who would rather attend flashy gay pride festivals (and that’s only ONE tiny example!) in foreign countries on the taxpayer’s time than stay home and even PRETEND to do his job, never mind put his nose to the grindstone to protect the interests of the residents of the State of California, as is his charge. What an embarrassment of a miserable failure this guy is. As you know.
“This was all laid out in a tense public hearing last month, where insurance watchdogs and members of the public blasted the CDI and Lara for favoring insurance companies over the people”
Translation: Communists groups and paid Soros protestors opposed any rate hike, because they don’t even live in California, and don’t care if your insurance is cancelled. They don’t care if you can’t get insurance. They don’t care if your house burns down. These Communists want you to lose your house. These same people also oppose all wildfire mitigation. They want all snow runoff to go to the ocean. They want everyone to live in urban, concrete apartment buildings and own nothing, a.k.a. Russia.
“…my department’s experts.”
And their pronouns are?
I have several thoughts. Responding to the phrase “with fairness and transparency” I think, yes, they’re screwing everyone to be fair, and they’re telling us they’re screwing us to be transparent. And what the hell “integrity” is supposed to mean in this context is lost on me. The other thing is for the hundreds of thousands of us who pay our premiums and never make a claim, what have they been doing with all that $ and dividends they get from investing it for the last hundred years? Something smells fishy. I call BS.