Rising Costs for Repairs and Rebuilding 
The cost to rebuild homes has continued to increase in recent years, which raises the cost of property claims. 

More Homes at Risk from Wildfires 
In recent years, the number of acres burned in California has been increasing, and more people are moving into areas prone to wildfires. This means that when extreme weather events like wildfires happen, the damage can be more costly due to the higher number of people, homes, and businesses at risk. For example, the January 2025 Los Angeles wildfires were the costliest in California history. State Farm has already paid over $5 billion on about 13,500 claims from those fires and expects total payments to reach around $7.6 billion. According to the California Department of Insurance, insurers have paid out more than $20.4 billion on more than 80,000 claims as of July 31, 2025. 

Rules That Make It Hard to Keep Up 
Outdated California insurance regulations like Proposition 103 make it difficult for insurers to adjust rates quickly enough to appropriately match costs and risks. For example, lengthy rate approval processes mean companies like State Farm can’t charge premiums that cover the true cost of claims. Ultimately, this means insurers may not have the capital necessary to pay on claims – forcing insurers to potentially reduce availability or leave the market. An insurer’s primary obligation is to maintain the money necessary to pay covered claims for their current customers. Over the past nine years, State Farm General experienced a $5 billion loss because it paid out more in claims than it collected in premiums, taking in an average of $1 in premium for every $1.26 paid in claims. This has forced us to make tough decisions, including pausing writing new homeowners policies. 

We continue to work with regulators, policymakers, and other stakeholders to find solutions that keep insurance available and affordable for the people of California now and in the future. 

Because insurers haven’t been able to charge rates that cover the true cost of claims, many have had to reduce their business in California or leave the market entirely. Most of the top 12 homeowners insurers in California have paused or limited new policies since 2022, and several plan to not renew some existing policies. 

What does this mean for customers? It means fewer choices when looking for insurance coverage. More Californians are turning to the California FAIR Plan, which was created as a last-resort option for property insurance in high-risk areas. While it helps fill gaps, it doesn’t offer the same coverage options or protections as standard policies. 

Because insurance rates have been kept too low for years, larger rate increases will be needed to make sure insurers can cover future claims and remain financially strong. That’s why State Farm General Insurance Company is working to adjust rates responsibly and taking steps to strengthen our financial health. These steps will enable us to continue to be here for customers when they need us most. 

We’re committed to helping Californians find the coverage they need today and building a more stable insurance market for tomorrow. 

At State Farm, we’re committed to working with regulators, policymakers, and industry leaders to create a more sustainable insurance market in California. Our goal is to expand your coverage choices and help ensure homeowners and businesses have access to affordable, reliable protection now and in the future. Here are some important steps needed to get there: 

Faster Rate Reviews 
Right now, it can take six months, or even a year or more, for insurance rates to be reviewed and approved in California. This delay happens partly because outside groups called intervenors are allowed to participate in the process. California is one of the only states that allows outside groups to participate in the rate review process. 

California regulators are working on streamlining this process to make it quicker and more efficient, so insurers can better respond to changing risks and costs. 

Using Science to Set Fair Rates 
California now allows insurers to use advanced, science-based risk models that help predict the chance of wildfires and other catastrophes. This is important because relying only on the past 20 years of data doesn’t fully capture today’s evolving risks. Many other states already use this kind of forward-looking modeling to set rates that are fair and accurate, and the California market will benefit from the use of these modern tools. 

Including Reinsurance Costs in Rates 
Insurance companies buy reinsurance to help cover the large costs associated with catastrophes. The cost of reinsurance has been rising everywhere, and until recently, all states except California let insurers include these costs when setting rates. Now that the Sustainable Insurance Strategy is largely implemented, insurers will have the ability to factor in the net cost of reinsurance as a legitimate business expense. This may help State Farm General recoup some of the costs of providing insurance coverage to their customers and thereby further stabilize its financial strength over the long-term. 

Refocusing the California FAIR Plan 
The California FAIR Plan was created as a safety net to provide basic property insurance for homes in high-risk areas when no other coverage is available. But its rapid growth shows it is being relied on more than intended, which isn’t sustainable. The insurance marketplace needs to become healthy again so more Californians can get coverage through standard insurance companies like State Farm. 

For those interested, you can find more details and updates on the FAIR Plan and its role in recent wildfire claims here: Update from the California FAIR Plan. 

We’re committed to working together to make insurance more accessible and affordable for all Californians, helping them protect what matters most. 

California’s homeowners insurance market is the most dysfunctional in the country, and State Farm has worked to be part of real solutions. The state is facing an availability and affordability crisis, and the California Department of Insurance should take responsibility for regulatory delays and uncertainty that have contributed to fewer choices and higher costs for consumers. The Department’s approach is adding uncertainty to a market that already lacks predictability, discouraging participation and leaving Californians with fewer coverage options when they need them most.

The threat to suspend State Farm General's ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California's homeowners insurance market.

We reject any suggestion State Farm engaged in a general practice of mishandling or intentionally underpaying wildfire claims, and we will respond through the process. The additional payments tied to the issues identified in the Market Conduct Examination were about $40,000 in the context of more than $5.7 billion paid.

Wildfire survivors deserve real solutions - not a distorted picture of State Farm’s response. We strongly disagree with the Department’s characterization.

State Farm General insures more than one million homes in the state of California and insured more homes in the affected areas than any other carrier. We handled more than 13,700 auto and homeowners claims, paid more than $5.7 billion to help customers recover, and nearly 200 claims professionals remain on the ground today helping customers rebuild.

Using a thin sample of claims to justify sweeping allegations turns regulatory oversight into a political weapon, creating headlines instead of delivering facts and real consumer protection. It was based on a sample of 220 files, and most of the issues cited were administrative or process-related - such as notices or letters sent after statutory requirements, documentation, or payee information - not broad failures to pay covered claims.

We take all feedback seriously. Every issue identified has been addressed or is being addressed through claim reviews, supplemental payments where appropriate, updated forms and letters, added training, and strong oversight.

State Farm General has announced additional steps to support recovery, including a new Vice President leading California Customer Relations and five customer-focused priorities for wildfire recovery.

These fires created extraordinary conditions that made even routine administrative work more difficult - displaced customers, inaccessible properties, changing housing arrangements, and evolving estimates.

We are proud of our response and of the people behind it. Claims professionals, agents, and support teams have worked long hours - often away from their own families - to inspect losses, answer questions, issue payments, support temporary living arrangements, and help customers navigate one of the most severe wildfire events in California history. We recognize that in an event of this scale, a perfect process is nearly impossible and some customers understandably and unfortunately experienced some frustration. Real progress has been made toward helping people recover and we remain committed to addressing remaining customer concerns.

State Farm has been protecting customers in California for nearly 100 years. The goals of this investigation by LA County are unclear but what is clear is that it will be another distraction from our ongoing work in California to help our customers recover from this tragedy.

• As of November 12, State Farm has paid over $5B on 13,500 Auto and Fire claims resulting from the January fires.
• In the last 30 days, State Farm has paid out more than $208M to customers, an average of $6.9 million every day.
• More than $2.2B has been paid out in advance payments and for additional living expenses for customers displaced by the fires.
• We anticipate ultimately State Farm General will pay between $6-7B in losses from these fires.
• There are still nearly 200 claims associates on the ground in California helping customers. Earlier this year, there were about 1,000 claims associates in California. These employees have chosen to make their career about helping people who have been devastated by catastrophes. This on the ground help has been amplified by thousands of State Farm employees who have helped from across the country.
• In California, there are just under 2,000 State Farm agents – more than 500 are based in LA County. They and their teams continue to work tirelessly to help people.

Customers should continue to directly reach out to us with claim questions or concerns. We actively work with each of our customers to understand the facts of their loss, identify the damages and applicable coverage, and ultimately resolve their claim.

State Farm has been cooperating fully with the California Department of Insurance Market Conduct Exam.

State Farm is actively working to subrogate – the process used by insurers to hold those responsible accountable – so deductibles can be returned to customers. State Farm filed suit related to the Eaton fire and served notices earlier this year related to the Palisades fire with several utilities.

The fact remains State Farm General is still the largest private insurer of homes in California and Los Angeles County. Other insurers have retreated over the last several years as California’s broken insurance regulatory environment, including intervenor participation, has suppressed rates despite rising costs of building materials, labor and inflation.  Over the last nine years, the lack of alignment between price and risk means that for every $1.00 collected in premium, SFG paid $1.26, resulting in over $5 billion in cumulative underwriting losses.

We remain committed to helping build an affordable, available, and sustainable insurance market for all Californians.

For the latest on our response to the California wildfires, information can be found here: State Farm® is here to help California customers impacted by wildfires.

The California FAIR Plan, with the approval of Insurance Commissioner Lara, can assess insurers licensed to sell property insurance in California if the FAIR Plan needs additional funds to help pay for property losses. Following the January 2025 wildfires in Los Angeles County, California’s insurance commissioner approved a $1 billion FAIR Plan assessment levied to insurers operating in the state. Each insurer’s assessment was based on their market share. As the largest insurer in California, State Farm General’s assessment to be paid to the FAIR Plan was over $165 million.

Insurers may recoup up to 50% of their assessment from policyholders. All insurer requests to recoup assessment costs must be filed and approved by the California Department of Insurance. To recoup a portion of the assessment, State Farm General will implement a temporary supplemental fee on personal and commercial lines policies (e.g., homeowners, renters, businessowners) in California. Recouping the costs associated with the FAIR Plan assessment helps State Farm General continue to serve California customers.

This temporary supplemental fee is a percentage of an individual policy’s annual premium. For Homeowners and Rental Dwelling policies, the fee is 1.13% each renewal for two renewal periods. For other personal lines policies, the fee is 2.25% for one renewal period. For commercial policies, the fee is 0.26% for one renewal period. Customers will begin to see the temporary supplemental fee on policy renewals effective Dec. 1, 2025, for personal lines and Jan. 1, 2026, for commercial lines.

State Farm General S&P Global Rating Update (Financial Strength Rating lowered; Stable Outlook)

S&P Global Ratings (S&P) concluded a previously announced review of State Farm General Insurance Company (State Farm General) to evaluate its standalone rating, separate from the State Farm Group rating. With this review, S&P lowered its financial strength rating (FSR) of State Farm General from ‘A+’ to ‘A-’ with a ‘stable’ outlook and removed the "CreditWatch - Negative" from the rating.

The outcome was anticipated, and our approach is unchanged. We remain deeply concerned about the financial position of State Farm General, as it is difficult to match price to risk in California. To ensure the long-term sustainability of State Farm General, we are being diligent in our efforts to turn around the financial stability of the company.

State Farm General has taken numerous actions, including the June 2024 rate increase request, to ensure our financial strength allows us to continue to protect our California customers.

The recent emergency interim rate approval by the Commissioner and receipt of a $400 million investment from State Farm Mutual Automobile Insurance Company®, through the issuance of a surplus note in June 2025, are critical steps in the process to continue serving our California customers.

The ‘A-’ rating meets Fannie Mae and Freddie Mac single family mortgage origination and servicing guidelines.

State Farm General - Summary Update

For six months, thousands of State Farm employees, associates, and agents have been helping customers recover from the devastating wildfires in Los Angeles. Many left their own families to be there for customers who were impacted. As the state’s largest private insurer, helping people is what we do. To date, we’ve handled more than 13,000 claims following the fires and paid customers more than $4.2 billion. As we continue to work with our customers through the claims process, we anticipate paying at least $2 billion more.

Our goal has always been to be part of a sustainable insurance market in California. For years, State Farm General has worked to help customers and support the insurance market in the state of California, continuing to provide coverage for more than 2.8 million policies, including more than one million homeowners. Over the last nine years, we have recorded more than $5 billion in underwriting losses in pursuing that effort. Here are the facts:
 

Our priority after the wildfires was to help our customers recover. That remains our priority.
 

• As of July 6, State Farm has received almost 13,000 claims related to the fires and paid over $4.2 billion to our California customers, more than any other insurer. 
   
• Given the magnitude of this event and its impact on so many families, we are still actively working with customers through the claims process. Anyone with a question or a concern should reach out to us.
   
• We evaluate each claim, including smoke claims, on a case-by-case basis. We’re committed to providing every customer all the benefits they have available through their policy.
   
• We are proud to have helped thousands of State Farm customers to date and committed to helping all of those customers impacted recover. 
   

State Farm has been committed to the state of California for almost a century.
 

• State Farm has had a presence in California since 1928 and currently serves almost 7.8 million policies in California. This includes 2.8 million residential and commercial fire policies served through our affiliate, State Farm General in California.
   
• State Farm General began providing property and commercial coverage in California in 1998 to manage the unique property risk exposure and regulatory environment in the state. State Farm has multiple affiliates so that we may serve as many customers as possible.
   

State Farm wants to continue serving California customers over the long term by stabilizing its financial condition.
 

• State Farm General submitted a rate increase to the California Department of Insurance in June 2024. That increase is a critical step to restoring the financial strength of State Farm General.
   
• Following the wildfires and the continued deterioration of capital from State Farm General, the Commissioner approved an emergency interim rate increase in May 2025.
   
• That increase must still be permanently approved through a formal rate hearing later this year and is only a portion of the original rate increase requested in June 2024.
   

Insurance will cost more for customers in California going forward because the risk is greater in California.
 

• In spite of the elevated risk and a unique regulatory environment, home insurance premiums in California have not matched price to risk and are below the national average. In fact, over the last nine years, State Farm General paid $1.26 for every premium dollar collected, resulting in over $5 billion in cumulative losses.
   
• State Farm and each of its affiliates, including State Farm General in California, operate on an individual entity-by-entity basis without regard to the financial condition of any other affiliated entity. It is the expectation of State Farm that each affiliate will, on an individual basis over the long-term, generate and maintain capital sufficient to support itself. Such capital is not freely transferrable among affiliated entities. A key to making insurance work is that each customer pays premium in line with the risk they present. Customers outside California are not paying for risks in California and they should not be expected to. 

State Farm Continues to Help Thousands of Californians

State Farm General Insurance Company (State Farm) is cooperating with the California Department 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 California Department of Insurance as well as other state regulators routinely examine all insurance companies. These exams help ensure processes and procedures are in full compliance with state regulations.

We’re here to help our customers recover and we empathize with those who are rebuilding their lives. Our focus continues to be on supporting our customers in their recovery from the largest fire event we have ever experienced. As of June 30, we have received approximately 13,000 total claims related to the fires and have paid over $4.2 billion to our California customers.

Our claims force is the largest in the industry and we have brought the full scale and force of our catastrophe response teams to help our Southern California customers recover. Our claim handlers remain on the ground assisting customers. Customers should continue to directly reach out to us with claim questions or concerns. We actively work with each of our customers to understand the facts of their loss, identify the damages and applicable coverage, and ultimately resolve their claim.

In California, we remain committed to helping build an affordable, available, and sustainable insurance market for all Californians.

For the latest our response to the California wildfires, information can be found here: State Farm® is here to help California customers impacted by wildfires.

State Farm General S&P Global Rating action (Financial Strength Rating remains on CreditWatch – Negative)

We remain deeply concerned about the financial position of State Farm General, as it is difficult to match price to risk in California. As we continue to emphasize in our ongoing interim rate filing, we need immediate rate increases to help stabilize State Farm General’s financial condition to be able to serve our California customers for the long-term. S&P’s decision today regarding changing its assessment of the status of State Farm General within the State Farm group from “Core” to "Strategically Important", resulted in SF General no longer receiving the ‘AA’ financial strength rating (FSR) assigned to State Farm Mutual and its core subsidiaries by S&P. Also, S&P lowering of its FSR on State Farm General to "A+" rating and continuing the "CreditWatch - Negative" reinforces the need for urgency.

The ‘A+’ rating does not affect customers who use their State Farm General policy as collateral backing for their mortgage.

Response to Commissioner Lara's provisional rate approval

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.

State Farm General has worked openly and honestly with all parties in this process. In addition, State Farm General will continue to monitor capacity to support its risks and build sufficient capital for the future.

Today we took the opportunity to reiterate with Commissioner Lara the urgency needed to approve State Farm General’s interim rate request so that State Farm General can continue helping California customers.

The actions State Farm General has taken in the state, including the request for interim rate increases, are designed to support State Farm General’s need to collect sufficient premiums to protect policyholders against the risk of loss to their homes and other property.

State Farm General S&P Global Rating action (Financial Strength Rating placed on CreditWatch - Negative)

State Farm General Insurance Company responds to Commissioner Lara Ahead of Feb. 26 meeting; Shares cost estimates of wildfires

Representatives from State Farm General Insurance Company (SFG) will attend a meeting tomorrow with Commissioner Lara about SFG’s emergency interim rate request. SFG submitted a letter to the Commissioner today.

SFG’s current estimate of direct losses from the Los Angeles fires stands at approximately $7.6 billion, taking into account both reported and not reported claims. Estimates for SFG’s retained losses after reinsurance, and for SFG’s share of total FAIR Plan losses, are approximately $212 million and $400 million, respectively. Based on these estimates, and after accounting for reinsurance recoveries, tax impacts and partial recoupment of SFG’s allocation of the FAIR Plan’s recent $1 billion assessment, the January fires will reduce SFG’s surplus, which stood at $1.04 billion at the end of 2024 after a decline of over $300 million from year-end 2023, by approximately $400 million. These initial estimates will continue to be reviewed and updated, if needed, as we continue through the claim adjudication process and more information becomes available.

State Farm Mutual Automobile Insurance Company (SFM) serves as the primary reinsurer for SFG and will assume the majority of losses related to these fires ceded by SFG under its reinsurance contracts.

The interim rate request is not to pay for the costs of the wildfires. SFG will rely on existing surplus and a robust reinsurance program to pay claims from the wildfires.

Immediate interim approval is an indispensable and critical first step to eventually restoring the company’s financial strength. Financial strength is necessary so an insurance company can pay for any future claims for the risks it insures.

In the letter submitted today, SFG said it agrees with the California Department of Insurance that the Commissioner should approve the interim rate request as it is “in the public interest, in order to maintain maximum availability of homeowners insurance options in California.”

As SFG said in its February 3 letter to the Commissioner, approval is needed to help avert a dire situation for the more than 2.8 million policies issued by SFG, including 1 million State Farm General homeowners customers, and the insurance market in the state of California.

Last year, one rating agency downgraded SFG’s financial strength rating due to its capital position. With further capital deterioration as a result of the wildfires, additional downgrades could follow. If that were to happen, customers with a mortgage might not be able to use SFG insurance on the collateral backing for their mortgage. 

SFG insures high concentrations of risk in California that could generate financial losses multiple times larger than the company’s current surplus. A smaller capital base will further constrain SFG’s ability to provide ongoing coverage.

Insurance will cost more for customers in California going forward because the risk is greater in California. Over the last nine years, the lack of alignment between price and risk means that for every $1.00 collected in premium, SFG paid $1.26, resulting in over $5 billion in cumulative underwriting losses.

We look forward to working alongside regulators, policymakers and industry leaders on creating a sustainable insurance environment in California – one that balances risk and increased rates, ensures long-term market stability and allows insurers like SFG to remain a vital part of California’s future.

Response to California Commissioner Ricardo Lara’s denial of emergency interim rate request 

We are very disappointed the Commissioner ignored his department’s recommendation to take the critical and necessary step to approve State Farm General’s request for interim rate increases associated with our June 2024 filings. 

This lack of approval sends a strong message to State Farm General about the support it will receive to collect sufficient premiums in the future to protect Californians against the risk of loss to their homes, property, and other claims. 

We have gone to great lengths to clearly answer the questions outlined by the Commissioner. While we’re positioned to handle all of the claims associated with the most recent wildfires, State Farm General must seriously consider its options within the California insurance market going forward. 

Commissioner’s Response

State Farm General asks the California Department of Insurance to immediately approve interim rate increases

• State Farm has served the customers of California for nearly 100 years and our intention is to continue serving them for many more. State Farm has more customers in California than any other insurer. State Farm General Insurance Company is the state’s largest provider of Fire insurance, with more than 2.8 million policies in California. State Farm General protects more than 1 million homeowners customers.
   
• State Farm helps people recover from the unexpected. That is what we are doing in the wake of the wildfires. Thousands of State Farm agents, agent team members and employees are on the ground in California and are assisting customers virtually in the wake of this tragedy. As of February 1^st, State Farm General (Fire only) has received more than 8,700 claims and has already paid more than $1 billion to customers. State Farm General will ultimately pay out significantly more, as collectively these fires will be the costliest disasters in the history of State Farm General. Reinsurance will assist us in paying what we owe to customers.
   
• The costs of the January 2025 wildfires will further deplete capital from State Farm General. Capital is necessary so an insurance company can pay for any future claims for the risks it insures.
  • Last year, one rating agency downgraded State Farm General’s financial strength rating due to its capital position. With further capital deterioration as a result of the wildfires, additional downgrades could follow. If that were to happen, customers with a mortgage might not be able to use State Farm General insurance on the collateral backing for their mortgage.
  • State Farm General asked the California Department of Insurance today to immediately approve interim rate increases to help avert a dire situation for the more than 2.8 million policies issued by State Farm General, including 1 million State Farm General homeowners customers, and the insurance market in the state of California.
     
• Insurance will cost more for customers in California going forward because the risk is greater in California. Immediate emergency interim approval of additional rate is essential to more closely align cost and risk and enable State Farm General to rebuild capital.
  • We must appropriately match price to risk. That is foundational to how insurance works. Higher risks should pay more for insurance than lower risks.
  • Over the last 9 years, the lack of alignment between price and risk means that for every $1.00 collected in premium, State Farm General paid $1.26, resulting in over $5 billion in cumulative underwriting losses.
  • State Farm General’s attempts over that same period to both raise rates and restrict growth, in order to keep our risk profile in line with available surplus, were constrained by regulatory considerations and met with limited success. This was due in no small part to intervenors in the rate review process, whose efforts to delay and decrease needed rate adjustments prevented State Farm General from maintaining a capital position supportive of its risk profile and impaired its ability to support continued underwriting of California properties.
  • Even before the January wildfires, at year-end 2024, State Farm General’s Policyholder Protection Fund – or capital available to pay future claims – was approximately a quarter of what it was in 2016.
  • State Farm General has had an outstanding filed rate increase pending since June 2024.
  • The magnitude of expected claims payments for the recent wildfires, along with its share of FAIR Plan losses, puts even more pressure on State Farm General’s capital position.
     
• State Farm General has made difficult decisions to attempt to responsibly limit overexposure in high-risk areas, while allowing for targeted growth in lower risk areas of the state.
  • In May 2023, State Farm General made the difficult decision to stop writing any new policies.
  • In a detailed letter to the CDI in March 2024, State Farm General said, “The swift capital depletion of State Farm General is an alarm signaling the grave need for rapid and transformational action, including the critical need for rapid review and approval of currently pending and future rate filings.”
  • In March 2024, another difficult decision was made to non-renew 30,000 homeowners policies, representing the company’s greatest catastrophe risk. That non-renewal process is ongoing. Following the recent wildfires, homeowners non-renewals in Los Angeles County were paused. Any of these homeowner policies which had pending non-renewals in Los Angeles County that were on the books on January 7^th will have an option to renew with State Farm General.
  • State Farm General still insures high concentrations of risk in California that could generate financial losses multiple times larger than the company’s surplus. A smaller capital base will further constrain State Farm General’s ability to provide ongoing coverage.
     
• We look forward to working alongside regulators, policymakers and industry leaders on creating a sustainable insurance environment in California – one that balances risk and increased rates, ensures long-term market stability and availability and allows insurers like State Farm General to remain a vital part of California’s future.