California insurance commissioner responds to State Farm non-renewal announcement

"This is a real crisis," said Insurance Commissioner Ricardo Lara, who spoke with Eyewitness News.
Monday, March 25, 2024
LOS ANGELES (KABC) -- After State Farm announced it will not renew more than 70,000 insurance policies in California over the next year, the state's insurance commissioner is speaking out.

"This is a real crisis," said Commissioner Ricardo Lara, who spoke with Eyewitness News on Friday.

Higher insurance premiums and non-renewals

State Farm, which is California's largest home insurance company, announced it will not renew 72,000 policies in the state starting this summer.

Lara said he wants to look at the company's finances, but says it's a delicate balance to keep them in California.

"Insurance companies are not like utility companies," he said. "By law, they don't have to be here, and when we try to overregulate, we'll see what happened after the Northridge earthquake, when the legislature came in and tried to overregulate, and they no longer write earthquake insurance in California."

Carmen Balber with Consumer Watchdog, an organization that's been critical of Lara as he tries to deal with insurance companies, has been keeping a close eye on the latest developments.

"What that tells us is the insurance commissioner's plan is not working," she said.

The group feels there needs to be new laws.

"We have been urging for years now that California require insurance companies who want to sell home or auto insurance in California, sell to everyone who does the right thing and it protects their homes. We urge the insurance commissioner to support that policy change, which needs to go through the legislature," said Balber.

This is happening with a number of companies.

In addition to State Farm, Allstate stopped issuing homeowners insurance policies to new customers in California in 2022.

Lara said his plan also involves changing the models insurance companies use to better assess risk and to lower rates for those who protect their homes.

"The current modeling is a black box," he said. "We're going to change that to be much more transparent."

He adds, "We bring the risk down in these communities, we keep insurers writing, then you get more insurers writing, you bring down the cost."

Lara said if State Farm does not renew your policy, notify the California Department of Insurance.

"We will make sure we have an insurance expert with you so that we help you transition and connect you with insurance companies who are writing policies in California," he said.

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