California Insurance Commissioner Ricardo Lara announced that his office will investigate State Farm’s handling of wildfire claims following the Los Angeles fires.
Lara made the announcement in an exclusive interview on Thursday with CBS News California Investigative Reporter Julie Watts, following a series of CBS News California investigations into California’s insurance crisis.
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Lara announced Thursday that the California Department of Insurance has initiated a formal Market Conduct Examination of State Farm.
Of particular concern is how State Farm and other insurers have been handling smoke damage claims.
“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,” Lara said in a statement.
No exact number of complaints filed against State Farm was revealed, but Lara’s office stated they’ve received general allegations from wildfire survivor groups.
In a statement, State Farm says they are cooperating with the state and will comply with the investigation.
“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 [California Department of Insurance],” State Farm stated.
Lara noted that California’s Department of Insurance has already recovered around $40 million for Eaton and Palisades fire survivors following inquiries into consumer complaints.
“Californians deserve to return to homes that are truly safe, not forced to handle smoke, soot, and ash on their own,” Lara said in a statement.
State Farm and other insurance companies have paid out nearly $17 billion to policyholders who survived the Eaton and Palisades fires, according to Lara’s numbers. State Farm says, as of June 10, they’ve fielded more than 12,800 claims related to the LA fires, paying out over $3.96 billion to Californian policyholders.
“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,” State Farm said in a statement.
The investigation announced Thursday also comes a month after the insurance department approved a 17% increase in home insurance premiums for State Farm customers following the LA fires.
Lara clarified in his interview with CBS News California that even if his office finds that State Farm has not properly paid out claims, state law does not allow his office to use those findings to prevent the State Farm rate increase.
However, depending on the result of the market conduct examination, his office could require State Farm to pay out claims that were previously denied and compensate Californians for delayed payments.
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Lara’s office noted that a Market Conduct Examination usually takes several months to complete.
