Representatives from State Farm will be meeting with the California Insurance Commissioner Wednesday to discuss the insurer’s request for an emergency 22% rate increase.
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State Farm, California's largest insurer, asked for the rate hike to restore the company’s "financial strength,” citing concerns about its financial situation.
State Farm estimates it will pay out $7.6 billion to settle claims from the Los Angeles fires, but will only lose about $612 million after reinsurance, according to the L.A. Times. The company will also have to pay about $400 million to help bail out the California Fair Plan.
The L.A. Times reports that those losses are in line with the losses disclosed by other insurers, including Farmers Insurance and Mercury Insurance.
Insurance Commissioner Ricardo Lara said earlier this month that the requested rate hike raises “serious questions” about State Farm’s financial situation. He asked for a meeting with the company so they could explain why such a dramatic increase was necessary.
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