California Insurance Commissioner Ricardo Lara does not plan on taking any action against State Farm after the insurance giant announced it was no longer accepting applications for new home insurance policies last month.
“Absolutely not,” Lara told KCRA 3 in an interview on Monday, responding to calls from consumer advocacy groups who have said he has the power to reverse State Farm’s decision. “According to my legal team, I don’t have the authority to do that. We’re going to focus on the things we can do, which is bringing companies together, having the conversation, making sure consumers are protected and don’t lose their coverage, and that’s what we’re going to focus on.”
State Farm’s decision went into effect on May 27, following Allstate’s decision to do the same. State Farm cited wildfires and the growing cost of construction for its decision to halt new policies. Lara considers their decision a “pause.”
“No insurance company is leaving. These are business decisions these companies have made, which is par the course; we’ve seen companies do this time and time again,” Lara said.
State Farm’s decision comes after it reportedly sought rate hikes that would have totaled more than $700 million total from consumers. Lara rebuffed claims that the nation’s largest insurer was trying to publicly pressure him to approve the increases.
When asked if he was concerned that other insurers in California may seek larger rate hikes with two giant companies pausing policies, Lara said his department is committed to working with insurers and protecting consumers.
“We have to be responsible to this ever-changing market of ours because the last thing I want is to limit the availability of insurance options for Californians,” Lara said.
Lara said he was confident in the work the Legislature and governor have approved to respond to climate change and enhance the state’s wildfire prevention and preparedness efforts. He also noted California homeowners can start getting discounts for hardening their homes against wildfires. He said all of this will help bring down California’s risk for insurance companies.
“There are challenges, but I’m very confident we’re going to bring these companies back,” Lara said.