California Insurance Commissioner demands State Farm justify 22% rate hike

California Insurance Commissioner Ricardo Lara has rejected State Farm's request for an emergency 22% rate hike on homeowner policies, stating that the company has not adequately justified the need for such an increase. In a letter, Lara emphasized that under Proposition 103, State Farm bears the responsibility to demonstrate the necessity of the rate hike, especially in light of its recent financial struggles attributed to major wildfires. A meeting is scheduled for February 26 in Oakland, where State Farm will need to address concerns regarding its financial stability, consumer impact, and transparency in decision-making. State Farm has reported over 8,700 claims and payouts exceeding $1 billion due to recent fires, claiming these events have severely depleted its capital. The company expressed disappointment over the denial but indicated its commitment to provide necessary documentation at the upcoming meeting. This situation highlights ongoing challenges within California's insurance market, especially in response to climate-related disasters.