California’s Insurance Commissioner announced that it will be conducting a formal investigation into State Farm’s response to claims related to the recent Los Angeles wildfires. The investigation was started due to the high number of complaints that have been filed against State Farm by fire survivors.

The complaints claim that State Farm has not managed the process well, often times reassigning adjusters and forcing policyholders to start the process over several times. Other complaints allege that loss estimates are insufficient, some are paying out around $300 per square foot when the actual cost of construction in the area is closer to $900.

If the investigators conclude that State Farm has done wrong, then millions of dollars could be recovered by claimants. It could also force the state to change its rules for insurers. The investigation could also be seen as another reason for insurers to pull out of California. Many large insurers, including State Farm, are no longer issuing property insurance policies in California, citing the lack of profitability due to the difficulty of doing business in the state.

New York Times