State Farm General Insurance Company (SFG) has formally requested emergency interim approval from California Insurance Commissioner Ricardo Lara for significant rate increases following the devastating Los Angeles wildfires. Citing the unprecedented financial impact, SFG is seeking approval for a 22% rate increase for homeowners, 15% for renters and condo owners, and 38% for rental dwelling owners, effective May 1, 2025.

In the wake of the January wildfires, State Farm has reported receiving more than 8,700 claims and has already paid out over $1 billion. The company foresees additional payouts that will further strain its financial position. The letter emphasizes the urgent need for the rate hike to maintain the company’s financial stability and ability to continue serving its nearly three million policyholders in California.

State Farm’s request is driven by the swift capital depletion exacerbated by the wildfires, and the necessity to avert potential downgrades that could impact policyholders with mortgages. SFG highlights that the rate increase will help rebuild its Policyholder Protection Fund, which has seen a significant decline over the past years, with a reported underwriting loss of over $5 billion since 2016.

The company has paused new policy issuance and non-renewals in wildfire-affected areas, stressing the need for immediate regulatory intervention to support its solvency and protect Californians’ interests. SFG warns that without the interim rate increase, it may face further downgrades and additional regulatory actions that could disrupt the insurance market in the state.

Commissioner Lara’s decision on this urgent request will have significant implications for the stability of California’s insurance landscape and the continued availability of coverage for homeowners facing increasing wildfire risks.

State Farm has had a history of requesting rate hikes in California, often citing increased risks and financial strain due to natural disasters like wildfires. In June 2023 State Farm requested a 30% rate hike for homeowners, citing financial instability and increased catastrophe claims. This request is still pending.

In March 2023 the company announced it wouldn’t renew 30,000 homeowners policies in California, but paused this process in Los Angeles County following the January 2025 wildfires.

In addition to State Farm, several other homeowner insurance carriers have also previously requested rate increases in California due to the increased risk of wildfires and other environmental factors. Some of these carriers include:

– – Allstate: Like State Farm, Allstate has paused issuing new policies in high-risk areas and has raised premiums for existing policyholders.
– – Farmers Insurance: Farmers has also scaled back offering new coverage in wildfire-prone regions and has increased rates for homeowners.
– – Liberty Mutual: Liberty Mutual has raised premiums and adjusted coverage options in response to the growing wildfire risks.
– – Travelers: Travelers has implemented rate hikes and made changes to policy terms to account for increased risks.

These companies, along with State Farm, have cited the need to align premiums with the heightened risk of wildfires and other natural disasters in California.

Several experts and officials have claimed that the recent wildfires and insurance rate hikes have triggered an insurance crisis in California. Notably, Gary Yohe, a professor at Wesleyan University, has expressed concerns about the broader financial instability that could result from the insurance challenges exacerbated by the wildfires. He mentioned that the state’s insurance market is facing unprecedented conditions, with many homeowners unable to secure coverage.

Additionally, the California Department of Insurance has acknowledged the growing issues of rising premiums, policy cancellations, and limited coverage options, which have led to a significant number of homeowners relying on the California FAIR Plan for basic fire insurance coverage