California Insurance Commissioner Ricardo Lara is urging survivors of the Palisades and Eaton wildfires with concerns about State Farm to file complaints as part of a newly launched formal investigation into the state’s largest insurer.
The department announced Thursday that it has initiated a market conduct examination of the insurer. The investigation will include reviews and evaluations of adjuster practices and State Farm’s methods across claims handling. It’s expected to take several months.
“While there are national standards for insurance claims handling, they can be vague and inconsistently applied, especially during large-scale, climate-driven disasters,” Lara said in a statement.
“This examination will assess whether State Farm has complied with California's consumer protection and claims handling laws and will help determine if further reforms are needed as natural disasters increasingly disrupt insurance markets across the country," he added.
The investigation comes roughly six months after wildfires ravaged the Los Angeles area. The largest of those blazes, the Palisades and Eaton fires, destroyed nearly $30 billion worth of houses in the region. Since then, a heated battle has unfolded as policyholders have alleged misconduct by the insurer and State Farm has asked for — and been granted — an emergency rate hike.
In a press release Thursday, State Farm said it "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," the release said. "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."
The insurer said that as of June 10, it has received nearly 13,000 claims related to the fires and has paid out close to $4 billion.
Request for complaints from policyholders
State regulators have already received “general allegations” about the way the insurer processes claims, according to Lara. There’s also growing concern about how State Farm is 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. “These issues create unnecessary stress, prolong recovery, and erode trust.”
Now, though, the commissioner is urging policyholders to come forward and file official complaints against the insurer.
“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."
Complaints can be submitted via insurance.ca.gov or by calling 800-927-HELP (4357).