California regulators want to suspend State Farm’s license for up to a year and levy the largest penalty ever against a state insurer, alleging it mishandled wildfire claims in Los Angeles County.
The Department of Insurance said it will file an administrative action against the state’s largest home insurer after an investigation into 220 sample claims found 398 violations of state law in about half of them.
This could result in the insurer losing its ability to sell insurance in California for up to a year.
Karl Susman, insurance agent and insurance industry expert, told KNX News this is major.
“When I first read about this and saw what happened, I said, ‘Well, there's, I think the fines are $5000 or $10,000 per violation, no big deal,’” he said. “But then, when you keep reading, and you see what the Department of Insurance is actually filing, what they're threatening, we're talking about some serious, serious dollars, and we're talking about some serious repercussions because if you're in violation of the Unfair Insurance Claims Practices Act, the sky is the limit. I mean, the amount of money that they could be served that they could be fined is, in the hundreds of millions or more.”
State Farm says it's paid more than $5.7 billion to wildfire victims. L.A. County has also launched its own investigation of the company.
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