The California Department of Insurance on Friday announced it had provisionally approved an emergency request by State Farm, the state’s largest single insurer, to raise its home insurance premiums by 22 percent provided the company can “justify it with data in a public hearing” next month.

Newsweek contacted State Farm for comment via email on Saturday outside of regular office hours.

Why It Matters

In January, Southern California was struck with a devastating series of wildfires which killed 29 people, and destroyed 13,000 homes and businesses, according to The Los Angeles Times, the area around America’s entertainment capital being particularly badly hit.

This has imposed an additional cost on State Farm, which was already struggling financially. The insurance giant said that in February it paid out around $1.75 billion on 9,500 claims related to the wildfires, and expects this figure to reach over $7 billion in total.

What To Know

In a statement issued on Friday the California Department of Insurance said it had “provisionally approved” State Farm’s request for a 22 percent home insurance rate increase “following recent devastating wildfires,” but only “if the company can justify it with data in a public hearing scheduled for April 8, 2025.”

California Insurance Commissioner Ricardo Lara said he’d made the “unprecedented decision” to “ensure long-term choices for Californians.”

Lara added that should State Farms withdraw from the state “it is evident that other California insurers are unable to absorb State Farm’s existing customers.” In this scenario many of State Farms’ current customers could be forced onto the California FAIR Plan, an insurance program of last resort that the state is trying to move people away from.

After the April 8 public hearing a judge will provide a suggested course of action to Lara, who will then make the final decision. State Farms has around one million customers in California, according to the AP.

In response, State Farms said the department’s decision was “a step in the right direction” and insisted it had “worked openly and honestly with all parties in this process.”

Last year State Farms asked for a 30 percent rate increase, which the insurance department is still considering. The company has said if this is later granted it will refund the emergency rates it is currently requesting.

Under California state law any insurance rate increase of seven percent or over must go through a rate hearing if there are objections, as there are to State Farms’ proposal.

What People Are Saying

In his statement Commissioner Lara said: “State Farm claims it is committed to its California customers and aims to restore financial stability. I expect both State Farm and its parent company to meet their responsibilities and not shift the burden entirely onto their customers. The facts will be revealed in an open, transparent hearing.

“Currently, too many Californians live in fear of having their insurance policies non-renewed. This anxiety perpetuates misinformation and discourages consumers from accessing their entitled benefits. This situation is unacceptable. I will remain vigilant in ensuring that State Farm processes claims fairly, fully, and promptly, and stands by its California customers.”

Reacting to Friday’s announcement State Farm said: “It’s time for certainty in the California insurance market for our customers. The provisional nature of today’s decision does not improve that certainty but it’s a step in the right direction. We are moving forward with implementing this provisionally approved rate and will continue to work with the California Department of Insurance for a sustainable future for the California insurance market.”

What Happens Next

California is struggling to attract and keep insurance companies following a string of severe weather events. Several companies have already pulled out of the state, with more threatening to follow, in moves that could be devastating for California residents.