California insurance commissioner meets privately with State Farm, hopes to make rate hike decision within two weeks

California's largest insurer should know within a couple of weeks whether it can raise premiums on its nearly 3 million policies in the state after making its case in a face-to-face meeting with Insurance Commissioner Ricardo Lara today.

In comments after the closed-door meeting, Lara said he would carefully consider the request, which he previously rejected. He said he hoped to reach a decision within two weeks.

State Farm General–the state arm of the national State Farm Group–had asked to increase homeowner premiums by an average of 22% on an interim basis outside the usual approval process under California insurance law. It wants to bypass the rate hearing that would normally be required, saying it has been waiting for the Insurance Department to approve rate increases it requested last year, and that payouts from the Los Angeles County fires have worsened its financial position.

In the request, made at the beginning of February, the company said it wants to start charging customers the "emergency" rate increases in May. Lara rejected the request against his staff's recommendation Feb. 14, saying he needed more information and called for the company's top executives to appear before him.

Wednesday's meeting, in the Oakland offices of Lara's Insurance Department, lasted for nearly an hour and a half. At the meeting were representatives of the department, State Farm, including Chief Executive Dan Krause, and Consumer Watchdog, an advocacy group that urged the commissioner to reject the interim rate increases.

In a press conference after the closed-door meeting, the commissioner said he is going to look at the company's data, ask for more information if he needs it, and want to "get this done" no less than two weeks from now.

"I want consumers to understand why I made the decision," he said.

State Farm executives said in a letter to Lara dated Feb. 25 that the company has paid $1.75 billion so far on about 9,500 claims and expects about $7.6 billion in total claim payments. The company estimates its surplus has decreased from $1.04 billion at the end of 2024 to about $400 million after the LA fires.

"This is an unfortunate circumstance for our customers and all Californians, and only worsens SFG's financial position and related internal and external measures of financial strength and forward-looking claims-paying ability from what they were last June," the company wrote.

Under Proposition 103, the voter-approved law that regulates insurance in the state, insurance companies that ask for rate increases of 7% and above are subject to rate hearings if an intervenor objects. Consumer Watchdog intervened in State Farm's rate requests last year and is objecting to the company's request for interim increases now.

As it has said before, State Farm stated in the letter that if its interim rate requests are approved and if the department eventually approves non-interim rates that are lower, it will issue refunds for the difference.

Consumer Watchdog's response to State Farm's letter said: "Granting an 'emergency interim rate' increase under these circumstances would set a dangerous precedent, effectively allowing insurers to circumvent Proposition 103's prior approval requirements."

During his press conference, Lara said he was also concerned about potentially setting such a precedent.

The meeting today was not an official rate hearing; Lara characterized it as an "informal meeting."

In an interview with CalMatters after the meeting, attorneys for Consumer Watchdog said the financial information State Farm has provided in its letter, as well as at the meeting, is not sufficient. They recommended again that the commissioner reject the interim rate request and expressed hope that Lara seemed open to bringing the matter to a rate hearing, as required by law.

"We need the underlying data" behind the numbers the company has publicly released, said Ben Armstrong, the actuary for Consumer Watchdog.

In an emailed statement, State Farm spokesperson Sevag Sarkissian said only: "Today we took the opportunity to reiterate with Commissioner Lara the urgency needed to approve State Farm General's interim rate request so that State Farm General can continue helping California customers."