Department of Insurance to hear State Farm's justifications for rate hike as high as 38%

ByStephanie Sierra

Tuesday, April 8, 2025 4:26PM

Dept. of Insurance to consider State Farm rate hikes as high as 38%

The Dept. of Insurance will host its first hearing Tuesday to determine if State Farm should be granted a nearly billion-dollar "emergency rate hike."

OAKLAND, Calif. (KGO) -- The California Department of Insurance will host its first hearing on Tuesday to determine whether State Farm should be granted a nearly billion-dollar "emergency rate hike."

It's the third rate hike State Farm has requested in just over a year, and it could affect millions of policyholders.

California's Insurance Commissioner Ricardo Lara has provisionally approved the request for increases as high as 38% - if the company can justify it with data in the hearing. Specifically, State Farm is asking for a 22% increase for homeowners on average, plus a 15% increase for condo owners, and a 38% increase for rental dwellings.

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Under state law, a thorough review of these requests is required to determine whether these increases are justified. But Consumer Watchdog, the only group fighting the hike, says the Department of Insurance isn't following the rules.

"Both the Department (of Insurance) and State Farm have completely violated those regulations. They have not complied," says Harvey Rosenfield, founder of Consumer Watchdog. "It's crazy to assume this can be done in one day."

During State Farm's last meeting with the commissioner, the company says it can cover claims from the LA fires, but deemed the fires left State Farm's financial condition in a "dire" state.

In a letter, State Farm wrote, "insurance will cost more for customers in California going forward because the risk is greater in California." They added the rate hike approval is "essential" to "enable State Farm General to rebuild capital."

The last time State Farm was subject to a rate hike hearing was in 2015 and then-commissioner Dave Jones rejected it. In this case, State Farm requested to close the Tuesday hearing to the public over safety concerns of insurance executives. That was rejected.

"What State Farm and the Department did here is try to avoid any public scrutiny of their deal," says Rosenfield.

It's unlikely the judge will conclude the hearing tomorrow. In fact, it's likely to resume for at least another day.

At that point, the judge will make his final recommendation to Commissioner Lara -- who has the power to approve it immediately or possibly rewrite it. We'll have to wait and see.

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