State Farm reaches deal to keep 17% hike in home insurance rates

"The agreement will provide financial relief to many policyholders while ensuring continued coverage for State Farm policyholders while California's insurance market stabilizes. State Farm argued the emergency hike was necessary because catastrophic fire losses jeopardized its financial ratings. The company has reported that it paid out $6.2 billion in claims last year, largely from the wildfires, with most of the costs covered through reinsurance payments."

"State Farm, California's largest home insurer, froze new business in 2023, announced 72,000 mass non-renewals, and sought a series of rate hikes. The deal allows the insurer to keep an average 17% increase in homeowner rates. Local rates for many of the company's 1 million home customers were much higher."

"Consumer advocates argued the agreement held the line on even higher increases and halted further policy cancellations that have deepened a crisis in the state's insurance industry. The insurer agrees to halt mass non-renewals in 2026 and face further rate review by 2027 under the settlement terms."

State Farm General reached a settlement with California regulators and consumer advocates to retain a $530-million emergency rate hike for homeowners insurance that took effect following the devastating Los Angeles wildfires. The agreement, negotiated by Insurance Commissioner Ricardo Lara, allows an average 17% increase in rates while the state's insurance market stabilizes. State Farm justified the increase due to catastrophic fire losses threatening its financial ratings, reporting $6.2 billion in claims paid last year with anticipated additional $1 billion in future claims. Under the settlement terms, State Farm must halt mass non-renewals in 2026 and undergo further rate review by 2027. Consumer advocates supported the agreement as preventing even higher increases and stopping additional policy cancellations that have worsened California's insurance crisis.

Read at Los Angeles Times