CA insurance boss not present at hearing as State Farm makes case to raise insurance rates up to 38%

OAKLAND, Calif. -- California's largest insurer, State Farm, tried to justify its request to raise property insurance rates as high as 38% during a public hearing in Oakland on Tuesday.

The state's top insurance boss, Insurance Commissioner Ricardo Lara, was not present.

RELATED: State Farm asks for 'emergency' 22% homeowners' insurance rate hike in wake of LA wildfires

7 On Your Side attended the hearing Tuesday with the expectation of seeing the commissioner listening to arguments from both sides -- specifically the data he requested from State Farm to prove these hikes are justified.

Michael Soller, the Deputy Commissioner of Communications for the Department of Insurance, says by law, Commissioner Ricardo Lara is not considered a participant in Tuesday's hearing.

"The goal today is a court hearing that's focused on fairness, transparency, and getting answers," said Soller. "Commissioner Lara ordered this hearing in order to get to the facts about what's happening with State Farm."

Stephanie Sierra: "I understand he's not a participant, but if he wanted to be here to hear both sides, he could've been present?"
Soller: "The commissioner's goal again is to get to the facts."
Sierra: "Yes or no -- could he have been here?"
Soller: "By California law, these are separate processes."

According to legal analysis of the state insurance code, the commissioner has the option to observe the hearing but not influence deliberations.

"State Farm has paused writing all policies," said Soller. "They have to come in and open their books and show the data for the department."

"We hope to see that data," said William Pletcher, Litigation Director of Consumer Watchdog.

RELATED: State Farm exec fired after undercover video of his 'Tinder date' raises rate hike questions

State Farm is now asking for an average 17% rate increase for homeowners, 15% for renters and up to 38% for rental dwellings, arguing the increase is needed to rebuild capital following the Los Angeles County fires.

The company testified its surplus went from $4 billion in 2015 to a projected $600 million in 2024.

But Consumer Watchdog says it's not the job of policyholders to bail them out for bad business decisions, adding State Farm is only entitled to rates they can prove.

"We just haven't seen the evidence that would justify the emergency request they're making," Pletcher said.

If approved, the interim rate hike would go into effect June 1.

It should be noted that the judge presiding over this hearing works under the California Department of Insurance; he issues his formal recommendation to Commissioner Lara, who ultimately makes the final decision.

The hearing resumes Wednesday.

Administrative Judge Karl Frederic Seligman presiding over the hearing works under the California Department of Insurance. Judge Seligman will issue a proposed order to the Commissioner based on the evidence presented within 10 days after the hearing.

Commissioner Lara ultimately makes the final decision.

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