CA SF Demands 22% Rate Hike

[somarco]

State Farm, California's largest property insurer, is demanding a 22% emergency rate hike after the Southern California fires, saying that over the last years it has paid out $1.26 in claims for every dollar in premiums it has collected.

Since the passage of Prop. 103 in 1988, state regulators have had to approve any rate hikes, which has led to rates not keeping up with rising claims and risks.

State Farm says that as a result, it has lost $5 billion over the last nine years in California, and that it had no option but to stop underwriting new policies in 2023.

State Farm, CA’s largest property insurer, demanding 22% rate hike after fires and huge losses

State Farm says that as a result of Prop. 103, it has lost $5 billion over the last 9 years and had no option but to stop underwriting new policies in 2023.

justthenews.com

 

[marindependent]

Yep - and thats only half the story.

According the SFChronicle, "It's been six months since State Farm General told regulators it needed an unprecedented 30% rate hike...That 30% rate hike request is still pending. " Source.

Additionally

State Farm Gen was downgraded in 2024 by AM Best "Financial Strength Rating (FSR) to B (Fair)" Source.

If it goes much lower than that - guess what happens to people's mortgages?

 

[NY independent]

What happens if SF does not get the cummulative 50% HO rate increases in the very near future? Will they exit CA altogether? Will they seek a state or federal bailout (with strings attached)? A huge bond to hold things together? They must have a contingency plan ready to go, right? How fast will a AM Best downgrade happen? I doubt mortgagees will react quickly to a downgrade, if at all....

 

[marindependent]

What happens if SF does not get the cummulative 50% HO rate increases in the very near future?

I think we are about to find out.

Will they exit CA altogether?

Possible, but I dont think so. I think they are in every state. They may nonrenew....LOTS of policies in Cali.

They must have a contingency plan ready to go, right?

I think this is their contingency plan. This is it, this is not a drill. Are you wowed?

How fast will a AM Best downgrade happen?

My guess is about 6 months, And IMO that is a vortex none of us wants to go down. I dont care what state you are in.

I doubt mortgagees will react quickly to a downgrade, if at all....

Hum..... - that is not what I am seeing/hearing. "California Casualty of San Mateo, was downgraded by a credit rating agency. As a result, his federally backed mortgage lender would no longer accept his insurance."
Source from Jan 5th 2025.

Have you tried getting a home loan with a policy that does not have house replacement cost or or roof replacement cost? The mortgage vipers are OUT with new purchases, I tell you, Some of the existing new mortgages may not take action, but the new purchases...

 

[Al3x Lee]

I have a solution but California DOI doesn't want to hear it

 

[ehall2]

I am in Georgia and a few years ago I went to Panama City, Florida and Port St Joe, Florida. I saw bill boards advertising State Farm and Auto Owners. I had a contact in the Georgia DOI who was the top person in consumer services and I would call him a couple of times a year just to talk and find out what was going on. I asked him about the bill boards and told him I didn't think insurance companies were writing business in coastal Florida and how could they do that when no other companies would. He said, "it's easy." "The companies form a separate company and if they get hit with too many claims, they will bankrupt the company and continue doing business." I said, "are you serious"? He said, "sure I am serious." It looks like we may find out if this is true in California.

 

[Tahoe Ray]

It looks like we may find out if this is true in California.

That's what State Farm General is so yeah, we're likely going to see that.

 

[Allen Trent]

If it goes much lower than that - guess what happens to people's mortgages?

They get forgiven by the government for hardship & how they vote as a block?

 

[Allen Trent]

State Farm Gen was downgraded in 2024 by AM Best "Financial Strength Rating (FSR) to B (Fair)" Source.

For clarity, that is merely the subsidiary they have in California to isolate this problem from rest of country, correct?. It isn't the larger entity of SF that was downgraded.

 

[Allen Trent]

I think we are about to find out.


Possible, but I dont think so. I think they are in every state. They may nonrenew....LOTS of policies in Cali.

I think this is their contingency plan. This is it, this is not a drill. Are you wowed?

My guess is about 6 months, And IMO that is a vortex none of us wants to go down. I dont care what state you are in.


Hum..... - that is not what I am seeing/hearing. "California Casualty of San Mateo, was downgraded by a credit rating agency. As a result, his federally backed mortgage lender would no longer accept his insurance."
Source from Jan 5th 2025.

Have you tried getting a home loan with a policy that does not have house replacement cost or or roof replacement cost? The mortgage vipers are OUT with new purchases, I tell you, Some of the existing new mortgages may not take action, but the new purchases...

Nationally, 16% of all home purchases under contract fell through in December. Some of that was due to inability to get acceptable insurance