California approves 22% State Farm rate hike amid wildfire fallout; insurers flee mismanaged state
By isabelle // 2025-03-18
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  • California Insurance Commissioner Ricardo Lara provisionally approved a 22% rate hike for State Farm homeowners insurance due to wildfire losses and market instability.
  • Insurers like Allstate and Farmers are exiting California’s high-risk market, forcing homeowners onto the state-backed FAIR Plan, which offers limited coverage.
  • A State Farm executive was fired after a secret recording revealed controversial remarks about wildfire victims and strategies to pressure regulators for rate hikes.
  • Critics argue the rate hike unfairly burdens homeowners, with experts warning that insurance costs will likely continue rising in the foreseeable future.
California Insurance Commissioner Ricardo Lara has provisionally approved a 22% rate hike for State Farm homeowners insurance, citing the financial strain of devastating wildfires and a deteriorating insurance market. The decision, announced on Friday, comes as thousands of residents struggle to rebuild after losing homes in the January wildfires, while others face the grim reality of being dropped by their insurers altogether. The provisional hike, which still requires final approval after a public hearing on April 8, highlights the deepening crisis in a state critics describe as "woefully mismanaged" under Governor Gavin Newsom’s leadership. State Farm, one of California’s largest home insurers, covers more than 1 million homeowners. The company argues that the rate increase is necessary to cover $7.6 billion in estimated wildfire losses, including over 8,700 claims totaling $1 billion from the January fires alone. State Farm General, the company’s California subsidiary, warned that its capital reserves have been depleted, leaving it unable to pay future claims without raising rates.

A market in crisis

The provisional approval reflects a broader trend of insurers fleeing California’s high-risk market. Companies like Allstate and Farmers Insurance have either dropped policies or halted underwriting altogether, forcing homeowners to turn to the state-backed FAIR Plan, which offers basic fire insurance for high-risk areas. “Many are already anxious about losing their coverage and being forced onto the FAIR Plan,” Lara said during a recent meeting with State Farm executives. The FAIR Plan, while a lifeline for some, often provides inadequate coverage, leaving homeowners vulnerable. In the Pacific Palisades alone, State Farm dropped 1,600 policies last July, leaving many residents without protection when the wildfires struck.

Exec’s secret recording sparks outrage

Adding fuel to the fire, State Farm executive Haden Kirkpatrick was fired after being secretly recorded discussing the company’s strategy to pressure California’s Department of Insurance into approving rate hikes. Kirkpatrick, who believed he was on a Tinder date, was recorded saying, “We’ll go to the Department of Insurance and say, ‘We’re overexposed here, you have to let us catch up on [our] rates.’ … He’ll say ‘Nah.’ And we’ll say, ‘OK, then we are going to cancel these policies.’” Kirkpatrick also made controversial remarks about wildfire victims, suggesting homes in the Pacific Palisades should never have been built. “It’s a f–king desert,” he said, adding that residents chose the area for “natural areas around them for their ego.” State Farm quickly distanced itself from Kirkpatrick’s comments, calling them “inaccurate” and “in no way representative” of the company’s views.

A temporary fix or a growing burden?

While State Farm called the provisional rate hike a “step in the right direction,” critics argue it places an unfair burden on homeowners who are already struggling to recover. “I think the rate increase is ridiculous,” said Michael Van Every, a San Jose resident whose policy was dropped two years ago. “The insurance commissioner needs to do a better job, and that’s not 22% increases.” Lara has demanded State Farm justify the hike with data at the April 8 hearing and has called on the company to halt non-renewals and seek a $500 million capital infusion from its parent company. However, even if the hike is approved, it may not be enough to stabilize the market. “State Farm customers can expect that their rates are going to continue to go up for the foreseeable future,” said Amy Bach of United Policyholders, a nonprofit advocating for policyholders. As California struggles with the fallout of wildfires and a collapsing insurance market, the provisional rate hike underscores the challenges facing homeowners and insurers alike. For residents like Van Every, who now rely on the FAIR Plan, the future remains uncertain. “It’s getting difficult to find insurance,” he said. “But it’s still a free market, so if I’m not happy with State Farm, I’ll have to shop somewhere else.” Sources for this article include: ZeroHedge.com CBSNews.com NBCBayArea.com NYPost.com
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