State Farm Paid $2.5 Billion For The Los Angeles Wildfire, And The Losses Far Exceeded Expectations

State Farm recently reported that it has paid $2.5 billion in compensation for the January Los Angeles wildfire, far exceeding the reported $1 billion. The company has received more than 12,300 claims related to fires. Data from the California Department of Insurance (CDI) shows that insurance companies have paid out more than $12 billion in claims for the two largest fires – the Eaton Fire and the Palisez Fire – which have destroyed more than 16,000 buildings in total. Preliminary estimates suggest that the total insured losses from the five fires could amount to as much as 40 billion US dollars.

The Los Angeles wildfire was triggered by Strong winds in Santa Ana, causing multiple fires to break out simultaneously and resulting in huge damage. State Farm, the largest homeowner insurance company in California, has taken the lead in applying to increase the homeowner insurance rate by 22% to cope with losses. California Insurance Commissioner Ricardo Lara temporarily approved this request, but the final decision needs to be determined based on the data at a public hearing. State Farm said that over the past nine years, its underwriting losses have exceeded 5 billion US dollars, and the fire has further deteriorated its financial situation.

In addition to State Farm, several Insurance companies such as Farmers Insurance and Liberty Mutual have also paid out more than one billion US dollars in claims for the fire. CDI data shows that 37,749 insurance claims have been filed so far, among which 27,821 have received advance payments. As the reconstruction work progresses, it is expected that the claim amount will continue to rise. State Farm has stopped underwriting new businesses in California. If this rate increase is approved, it will take effect and cover multiple types of insurance such as homeowners and renters.

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