California lawmakers are calling on the state Department of Insurance (CDI) to speed up its review of State Farm General Insurance’s handling of wildfire claims. They want the CDI to finish its investigation within 60 days and to hold off on any homeowner rate increases until the review is complete.
This demand comes after the CDI announced in June that it was looking into how State Farm dealt with claims from the recent Los Angeles wildfires. Some consumer groups have accused the insurer of lowballing payments, delaying claims, and wrongly denying some. The CDI’s probe is examining issues like frequent officer changes, inconsistent handling of similar claims, and poor record-keeping between teams.
State Farm has already received preliminary approval to raise homeowners’ rates by 15% to 38%. This follows an earlier 17% increase that was approved in April. Assemblymember John Harabedian, who represents Pasadena, criticized the proposed hikes, pointing out that wages haven’t gone up by anywhere near that amount in recent years.
In a related development, an administrative law judge ruled against the CDI and State Farm’s attempt to hold private prehearing meetings. The judge insisted on transparency, requiring the insurer to reveal expert witnesses and allowing investors to review documents. The judge also rejected any delay in questioning State Farm’s claims practices until after rate decisions. The judge said splitting the review process could cause confusion and delays.
The CDI has been active in protecting policyholders affected by wildfires. By mid-June, State Farm had received over 12,870 wildfire claims and paid out more than $4 billion. Thousands of policyholders faced total losses. So far, the CDI has helped recover over $40 million for those hit by past fires through complaints.
Lawmakers want the CDI to make sure California’s Fair Plan, which provides coverage for hard-to-insure properties, also covers smoke damage and to increase transparency around loss estimates and complaints. Insurance Commissioner Ricardo Lara emphasized that the goal is to help wildfire survivors recover fairly and fully.
The CDI is also working on other efforts, including forming a Smoke Claims Task Force and taking legal action against the Fair Plan over smoke-related claims. This all highlights the serious insurance challenges California faces after its recent wildfire season. Lawmakers and regulators seem determined to make sure insurers like State Farm handle claims properly and keep rate increases in check during this difficult time.