California’s second-largest home insurer, Farmers Insurance, has requested approval from the state’s Department of Insurance for a 6. 99% rate hike on homeowner policies across the state. The move comes amidst ongoing efforts to address California’s escalating property insurance crisis. Proposed Rate Hike and Enhanced Discounts Farmers Insurance also announced plans to increase discounts for customers who bundle their home and auto policies from 15% to 22%. This enhanced discount aims to incentivise more homeowners to combine coverage, potentially improving customer retention and attracting new business. Lifting the Policy Cap In addition, Farmers is removing its previous cap on the number of new homeowner policies it will write. This includes policies under Farmers Smart Plan Home, Smart Plan Condominium, and Smart Plan Renters. The cap, introduced in 2023 due to inflation pressures and increased weather-related claims, limited the insurer from accepting more new policies. Earlier this year, Farmers increased the cap to 9, 500 new policies per month, including condo and rental properties. The latest move eliminates this restriction entirely, signalling Farmers’ confidence in expanding its market share. A Commitment to Growth and Accessibility Behram Dinshaw, President of Personal Lines at Farmers Insurance, stated: ‘By removing the cap on offering new homeowners policies, Farmers is doubling down on its commitment to California homeowners, expanding choice and availability for consumers across the state.’ He added that the insurer is submitting a new rating plan inspired by the state’s Sustainable Insurance Strategy, which aims to broaden coverage options for more Californians. Targeting Distressed Regions Farmers Insurance has also filed a new rating plan aligned with Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy. This plan is designed to increase coverage in regions classified as distressed by the Department of Insurance, where insurance availability remains limited and prices are high. As part of this initiative, Farmers plans to target approximately 300, 000 consumers in these areas by early 2026. The insurer will also provide local Farmers agencies with resources to enhance marketing efforts, aiming to reach more residents in need of affordable coverage. Reducing Dependence on the FAIR Plan According to Farmers Insurance, this new framework seeks to stabilise California’s property insurance market by increasing access to coverage and reducing reliance on the FAIR Plan-the state’s insurer of last resort, which offers limited coverage at higher prices. Farmers is seeking to implement the rate hike by September 15, 2026. Government and Industry Reactions Lara lauds Farmers Insurance’s decision, calling it a major turning point that will help people move away from the FAIR plan and secure coverage on their own terms. Nearly a year after the insurance department finalized Lara’s Sustainable Insurance Strategy to address California’s home insurance crisis, these reforms included new rules allowing insurers to use forward-looking wildfire risk models to set prices and pass some reinsurance costs to policyholders. While industry experts claimed these changes would raise prices for consumers, Lara argued that the framework would encourage insurers to write more policies. Major insurers, including Mercury and CSAA, applied for rate hikes around 6. 9%, as requests of 7% or more would trigger mandatory hearings for consumer groups.
https://www.ibtimes.co.uk/farmers-insurance-seeks-699-rate-hike-offers-22-discount-you-may-feel-squeeze-1758159
Farmers Insurance Seeks 6.99% Rate Hike, Offers 22% Discount — and You May Feel the Squeeze
