California's insurance regulator has approved a 17% premium increase for State Farm homeowners, aimed at addressing the financial strain caused by the January wildfires. The decision, backed by Insurance Commissioner Ricardo Lara, responds to growing challenges in retaining insurers amid high fire risks. The increase affects around one million policyholders and aims to prevent State Farm from further policy cancellations. While the company had sought a 22% increase, it was ultimately set to 17%. Along with the premium hikes, State Farm will also receive a $400 million cash boost from its parent company.
The emergency rate hikes are necessary to help the company avoid a 'dire' financial crisis that could force them to drop more California policies.
Judge Karl Frederic Seligman called the ruling a 'rescue mission to stabilize State Farm's financial condition while safeguarding policyholders'.
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