(NationRise.com) – California’s largest insurer has threatened to leave the state unless lawmakers allow it to hike its prices by more than 50%. State Farm argues that climate change is altering conditions in the Golden State and causing hazardous weather events, thereby driving up risk and related insurance costs. Competitors Allstate and Farmers Direct have made similar remarks in recent months.
State Farm explained that it wants to increase homeowner premiums by 30%, condominium rates by 36%, and renter rates by 52%. Insurance Commissioner Ricardo Lara said the hikes, which will affect millions of consumers, will negatively impact “the integrity of our residential property insurance market.” Lara added that he is determined to “get to the bottom” of State Farm’s financial situation.
The price hike is the third requested by State Farm this year – it increased its prices in January and again in March. The prior hikes were justified by what State Farm called “historic increases in construction costs,” as well as “rapidly growing catastrophe exposure” and an increasingly challenging market.
The Insurance Commission will now organize a hearing, during which consumers will be able to voice their concerns and decide how to respond to the insurance giant’s demands.
Reports indicate that State Farm is demanding increases while generating $87.6 billion in annual revenue. Additionally, the company was valued at $143 billion in 2021. Nevertheless, executives claim that increasing wildfires and reconstruction costs prompted its earlier rate rises.
Florida is experiencing similar problems, and last year, the Farmers Insurance firm stopped offering policies there, affecting 100,000 customers. Mark Friedlander, a spokesperson for the Insurance Information Institute, said Farmers Insurance was one of 15 companies to “place moratoriums on new business.” He added that seven insurance firms became insolvent in 2023, and four more withdrew from the Floridian market.
An insurers group stated that extreme weather events, combined with a legal system it claims is ripe for abuse, meant providing coverage in Florida came with excessively high risk.
Copyright 2024, NationRise.com
