By Levi Sumagaysay, calm
This story was initially published by Calmatters. Register for their newsletters.
State Farm can increase the owner and other prices from next month, becoming the first insurance company to win approval to do so in an emergency in California.
The greatest state insurer made the unprecedented request for emergency rates earlier this year, after declaring that it was in financial distress and expected more than $ 7 billion in complaints due to fires from the County of Los Angeles in January.
The staff of the State Insurance Department recommended the approval of the company’s request, but the insurance commissioner Ricardo Lara asked the company more information on its finances. He also asked if the insurer could turn to his parent company, State Farm Mutual, to get help. Lara then approved by condition but laid the official decision of a judge, who supervised a three -day public hearing last month to examine the proposed agreement between the ministry and the insurer.
“As a whole, it represents a fundamentally fair, adequate and necessary measure – actually operating as a rescue mission to stabilize the financial situation of the State farm while protecting the insured,” wrote Karl -Fredric Seligman, the judge of administrative law, in a 38 -page decision published today.
Lara, who as a commissioner has the last word, adopted the decision today. The decision means that State Farm can increase its rates on average by 17% for owners, 15% for tenants and condominiums and 38% for rental housing from June 1.
“I balance all the facts,” Lara said in a statement. “The protection of all state agricultural customers and the integrity of our insurance market is an urgent issue.” He added that the company must always justify its need to increase the rates to a full rate audience at the end of this year.
“Today’s decision that would make consumers pay now, but allowing State Farm to wait until months before having to show its mathematics is a great disappointment for consumers,” said Carmen Balber, Executive Director of Consumer Watchdog, the lawyer’s defense group whose lawyers had argued against the approval of the increase in rates during the hearing, in a press release. “Proposal 103 approved by voters indicates that an increase in rates should not come before the justification of the rates, but that is what happened here,” added Balber.
The approval comes despite the calls for the insurance service to investigate complaints concerning the state processing by the claims by the victims of fires in the Los year. These survivors and legislators who represent them say that the company has delayed and refused complaints, and urged Lara to reject the company’s request to increase its rates. But the commissioner told the survivors of fires during a zoom meeting during the weekend that the increase in rates and complaint complaints were separate questions.
“This is exactly the problem,” said Joy Chen, chief of the Network Eaton Fire Survivors Network. “Approving this increase in rates without examining the conduct of State Farm would send a scary message to each Californian: you can pay your bonuses – but do not count on your insurer when the disaster strikes.”
The spokesperson for the State Farm, Sevag Sarkissian, said: “We have the greatest force of complaint in industry, and they focus on our customers and help them recover from the largest fire event that we have ever known in the state.”
Lara wrote a letter to the Director General of the State of the Farm, Dan Krause last week, asking for details on the processing of complaints by the company. In Krause’s response, he wrote that the company had received complaints on less than 3% of the more than 10,000 complaints filed after fires in the Los Angeles region.
The CEO also said in the letter that the company would provide information requested by the Lara department according to the standards he uses to examine, investigate and process claims caused by smoke.
But Krause refused to increase the amount of the content coverage it provides to the insured without requiring an inventory to 75%, as requested by Lara, claiming that the 65% that she provides already leads the industry.
In her declaration today, Lara said he expects the company to pay her claims to dismiss survivors “fully and fairly” and implied that her department could conduct a more formal investigation into complaints. “Nothing is outside the table,” said the commissioner.
In the decision of the judge concerning the increase in prices, he tackled the possibility that this primary approval could open the way to other insurance companies to request increases in intermediate emergency rates after other major fires. Seligman also mentioned that State Farm will always have to prove her file more for the requests for initial origin that she submitted last year, which will be taken into account in a full hearing. This hearing had been scheduled for next month, but now may not start before October so that the parties can prepare for it.
“A complete rate audience serves as a critical signal to the market that the emergency rate requests from the advanced state -type state are serious (and) will suffer a rigorous examination,” wrote the judge.
State Farm has promised to provide reimbursements to police holders if, after hearing the full rate, approved rates are lower than intermediate rates. As a condition of the accusation of provisional rate increases, State Farm agreed to obtain a surplus of $ 400 million in his parent company and promised to cease the non-renewal of policies until the end of the year.
State Farm wrote in his post-affair thesis that the approval of his rate request was vital for his financial strength. The insurer said that his financial situation had led to a few credit demances and that he was trying to avoid any additional demotion, which could endanger the insurance policies of more than a million California owners.
Granting the State Farm that rate increases were in the interests of state consumers, as it helps maintain available insurance, post-handicap reading of the insurance service.
Consumer Watchdog wrote in his post-impaired memory that the state of the farm has not proven that the increases were actuarially justified.
This article was initially published on Calmatters and was republished within the framework of the Creative Commons-Noncompromial-Noderivatives license.
