A group of policyholders affected by the January wildfires in Los Angeles is calling on Insurance Commissioner Ricardo Lara to act on his statement about a possible investigation into how State Farm is handling claims.
During a May 10 meeting, Lara said a market conduct exam of State Farm could happen. His remarks came after hearing from many policyholders who reported long delays, low settlement offers, and denied insurance claims.
The Eaton Fire Survivors Network sent a letter asking why such an investigation is even in question, pointing out that State Farm receives more complaints than any other private insurer.
The group stated that survivors from Eaton and Palisades have submitted multiple complaints to the Department of Insurance without getting answers. They criticized the department’s bulletins asking insurers to improve, saying they have no effect.
LA Wildfires to trigger record losses without immediate rating impact on (re)insurers. Fitch Ratings states these losses are unlikely to impact the ratings of property and casualty (P&C) (re)insurers due to strong capital buffers, diversified risk exposure, and the ability to raise premium rates.
Insured losses are estimated between $10 bn and $30 bn, with economic losses projected at $150 bn to $275 bn.
While these losses may not affect capital levels, they are expected to reduce near-term earnings, particularly for companies with significant exposure to claims from homeowners, auto, commercial property, and business interruption lines.
The California Department of Insurance said it does not release claim data by company, since the numbers change frequently.
Still, it confirmed that the volume of complaints about State Farm matches its size and market share.
- State Farm was California’s top home insurance provider for multiple risks, holding 19.92% of the market.
- Farmers Insurance Group 14.93%
- CSAA Insurance Group 6.52%
- Liberty Mutual Insurance 6.5%
- Mercury Casualty Group 6.11%.
Along with the letter, the group sent nearly 400 personal statements to Lara. These stories described key problems: policyholders feel abandoned after paying premiums for years, delays caused by inexperienced adjusters, refusal to test homes for toxic materials, and loss estimates that fall far below expected values.
The group asked Lara to begin a market conduct exam immediately, hold off on rate decisions until the review ends, and demand that State Farm provide its original loss estimates for every affected home.
They also requested public access to State Farm’s response to a Department of Insurance letter seeking more details on its claims process.
In a statement, the Department of Insurance said its wildfire reviews involve both individual complaints and broader exams, which have returned tens of millions of dollars to policyholders. However, the department noted that these reviews take time due to detailed fact-checking.
State Farm responded that it has the largest claims team in the industry, focused on helping those impacted by the fires. A spokesperson said the team is still in the field, working directly with policyholders to assess damages and confirm coverage.
