CA Could Launch Investigation Of State Farm Amid LA Fires

LOS ANGELES, CA — California Insurance Commissioner Ricardo Lara signaled over the weekend that an investigation into State Farm General’s handling of the LA fires could happen.

Lara faced a barage of complaints on a Saturday at a community meeting over Zoom, which was attended by more than 200 survivors of the Palisades and Eaton fires, the Los Angeles Times reported.

Survivors have underscored delays in processing their claims, roadblocks to testing toxic substances and insufficient money to fix damaged homes and replace those destroyed by flames.

"It's not off the table," Lara told community members.

His department has the authority to pursue a "market conduct" exam into the company's handling of the fires.

In response, State Farm told the LA Times that it is still focused on helping customers recover from "the largest fire event we have ever experienced in the state."

The state's largest insurer says it has received more than 12,600 claims as of May 5. Of those, it has paid $3.4 billion to customers, the Times reported.

Read more from the Los Angeles Times: Insurance commissioner signals possible probe into State Farm’s handling of L.A. wildfire claims.

The possibility of a probe into State Farm comes as the insurer awaits an answer as to whether it will be able to pursue a 17 percent rate hike for homeowner policies. Originally filed as a 22 percent rate hike, the insurer seeks to recoup some of its losses from the Jan. 7 fires through policyholders.

In March, Lara provisionally approved the emergency rate hike, but a judicial process that is currently underway will determine whether the company can raise its rates.

On Saturday, Joy Chen, leader of the Eaton Fire Survivors Network, asked Lara not to grant the insurer a rate hike until an investigation of the complaints is complete.

But Lara said he could not take those complaints into consideration for the rate hike decision.

"Lara’s most important job is to protect California families but he is saying the department does not consider claims management when approving rate hikes — but this is one of the few legal powers he actually has to regulate the industry,” she later told the Times.

READ MORE: Another Blow To CA Living Costs As Major Rate Hike Looms

In March, Lara ordered State Farm to halt canceling and not renewing policies through the end of the year.

“Currently, too many Californians live in fear of having their insurance policies non-renewed. This anxiety perpetuates misinformation and discourages consumers from accessing their entitled benefits," Lara said. "This situation is unacceptable."

He is also calling on the state's parent company, State Farm Mutual, to give or lend State Farm $500 million to improve its financial standing.

Under California law, insurers that request rate increases of more than 7 percent must go through a hearing. Lara's office says such rate increases authorized under Proposition 103 are "extremely rare." State Farm was also the subject of the state's last rate hearing in 2015, Lara's office said.