State Farm aims to raise California auto insurance rates by $264 million

Auto insurance rates - Cash

The insurer is now catching up to other companies in raising their rates to pre-pandemic levels.

Drivers in California who have been enjoying lower auto insurance rates than they were paying before the pandemic are likely to be losing that price advantage in the near future.

The insurer will be returning the premiums it charges back up from the lows they hit after 2020.

As motorists have stopped sheltering in place and are back on the roads, and the majority of people who had been working remotely are now headed back into their offices, insurers have been raising their auto insurance rates in California. State Farm has been holding off, but that is likely about to change.

Auto insurance rates - Rate increases

State Farm has filed for a $264 million increase with the California Insurance Commissioner and is awaiting approval to go ahead with the hike. So far, Commissioner Lara has already approved a total of about $1 billion in increases to premiums from the top six insurers in the state. Should State Farm receive the approval it is seeking, it will mean that the 3.7 million drivers it covers in California will see an average increase of 6.9 percent per year, which will equate to an average of $71 per policy, said Consumer Watchdog Data.

State Farm was required to justify the auto insurance rates increase in its request to do so.

Experts expect that there will be a number of factors included in the insurer’s explanation of why it would like to charge its customers more money. For instance, it could be that they will start by saying that the hikes are needed to compensate for the considerable underwriting deficit it experienced last year. On $45.7 billion in premiums, its underwriting deficit was a massive $13.4 billion. Hiking rates would be a natural move for an insurer in this situation to take to make up for such losses.

That said, according to Consumer Watchdog, the company’s greed is not to be ignored in explaining why the size of the price increase is being requested.

“The department just rolled out, and rushed out, increases in each of these cases without full justification of any of them,” said Consumer Watchdog executive director Carmen Balber, who has accused Commissioner Lara of essentially rubber stamping the requests for increasing auto insurance rates.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.