California regulators are escalating their fight with State Farm.
The California Department of Insurance is seeking up to $4 million in penalties and weighing a one-year suspension of the insurer’s ability to write new policies in the state over its handling of claims tied to the January 2025 Los Angeles wildfires, the Los Angeles Daily News reported.
The department said its investigation, launched last summer, found the company delayed investigations, underpaid homeowners and repeatedly reassigned adjusters — a tactic claimants referred to as “adjuster roulette”— creating confusion for policyholders already navigating disaster recovery. The probe reviewed 220 claims and identified 398 alleged violations of state law, each carrying penalties between $5,000 and $10,000.
“Our investigation found that State Farm delayed, underpaid and buried policyholders in red tape at the worst moment of their lives,” Insurance Commissioner Ricardo Lara said.
The insurance department has passed its findings to an administrative law judge, who could hold State Farm’s fate in their hands as they decide whether to suspend the company’s certificate of authority to underwrite policies in California. The dispute arose months after Lara approved an emergency 17 percent rate increase for State Farm homeowners policies as insurers continued retreating from California’s wildfire-prone markets.
State Farm denied the investigation’s accusations.
“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” the insurer said. “California’s homeowners insurance market is the most dysfunctional in the country, and State Farm has worked to be part of real solutions.”
The difference between insurance payout amounts and the actual costs of rebuilding has become a sticking point in the race to become California’s next insurance commissioner. The gulf is roughly $603 per square foot, according to artificial intelligence startup ClaimArchitect. In late March, ClaimArchitect hosted a forum for candidates including state Sen. Ben Allen, state legislature alum Steven Bradford, and political outsiders Merritt Farren and Patrick Wolff, where they outlined their plans to help past and future fire victims, The Real Deal reported. Farren is a business executive who lost his home in the Palisades fire, while Wolff is a financial analyst who previously helped establish Capital One’s auto and home insurance brokerage. — Chris Malone Méndez
Read more
Residential
Los Angeles
Campaign promises offered as assurances on California’s troubled resi insurance market
Residential
Los Angeles
State Farm approved for 17% rate hike amid California “insurance crisis”
Residential
Los Angeles
CA Insurance Commissioner: “nothing is off the table” in resolving statewide crisis