By Mary O’KEEFE

On June 12 California Insurance Commissioner Ricardo Lara launched an investigation into State Farm Insurance’s handling of recent wildfire claims. 

The investigation came after a large number of complaints against State Farm from those affected by both the Palisades and Eaton wildfires. 

“The California Dept. of Insurance has initiated a Market Conduct Examination of State Farm General Insurance Company, expanding its ongoing investigation into consumer complaints against the insurer,” stated Lara’s office. 

“Some troubling patterns that my staff will investigate include the frequent reassignment of multiple adjusters with little continuity in communication, inconsistent management of similar claims and inadequate record-keeping or information-sharing among claims teams. These issues create unnecessary stress, prolong recovery and erode trust,” said Lara. “The strongest evidence we can present is the voice of consumers themselves. I urge any wildfire survivor facing delayed payments, claim disputes, multiple adjusters, smoke damage issues or any other problems to file a formal complaint with my Department.”

Since January, the Department has already recovered more than $40 million for survivors of the Eaton and Palisades fires through its intervention on formal consumer complaints. As of May 12, insurance companies have paid out nearly $17 billion to residential and commercial insurance policyholders impacted by the Eaton and Palisades fires. One area of growing concern relates to how some insurers, including State Farm, are handling smoke damage claims. The unprecedented urban impact of these wildfires has created new challenges and a lack of consistency as to how insurance companies are handling these claims – leading to confusion and delays for homeowners, according to a statement from the Commissioner’s office.

“These residents have organized with neighbors, documented complaints and created a compelling argument that warrants this Market Conduct Examination by the Department of Insurance. I was proud to elevate their demands by authoring a letter co-signed by Legislative colleagues demanding a Market Conduct Investigation into LA Fire Victims claims. I have also spoken directly with Commissioner Lara and appreciate his engagement and commitment to our collective recovery as he, again, demonstrates by opening this critical investigation,” stated Senator Sasha Renée Pérez.

While the Department has received general allegations from wildfire survivor groups regarding State Farm’s processing of claims, a formal complaint is needed for the Department to take action and advocate for consumers. Complaints can be submitted at insurance.ca.gov or by calling (800)-927-HELP.

State Farm released a statement on June 12 concerning the investigation:

“State Farm General Insurance Company (State Farm) is cooperating with the California Dept. of Insurance (CDI) and will comply with the market conduct exam process. A fair review will find that thousands of State Farm customers are being helped by our teams on the ground in Los Angeles County and are very satisfied. Our efforts will remain on serving all our customers and meeting our obligations under the contract while providing the necessary information to the CDI. The Department routinely examines all insurance companies. These exams help ensure processes and procedures are in full compliance with state regulations.”

In May State Farm requested an emergency rate hike stating it was in financial distress due to claims from the January fires. The California State Insurance Department staff recommended approval of that request. 

Judge Karl-Fredric Seligman held a public hearing and in the end approved the rate increase stating, “It represents a fundamentally fair, adequate and necessary measure.” 

The rate increase requested was a 22% for homeowners, 15% for renters/condo owners and 38% rental dwelling policies citing severe capital depletion, particularly after coming under strain because of the January 2025 Los Angeles wildfires, according to the decision by the judge. 

“The decision to grant State Farm’s unprecedented request for an emergency rate increase disregards the hardships faced by fire victims and their calls for accountability,” said Pérez at the time of the decision. “Last month I led a group of lawmakers calling on Insurance Commissioner Ricardo Lara to delay a decision on the increase until the California Dept. of Insurance could conduct an expedited investigation into hundreds of complaints made against State Farm. These complaints came from Los Angeles County fire victims, including many in my district, who shared their experiences of delays and denials in receiving their valid insurance claims.”