The State Farm is approaching closer to an emergency increase in the CA tariff

From LevagsCalmness

This story was originally published by CalmattersS Register about their ballots.

The state farm may soon win final approval for gaining premiums for homeowners in California and others temporary, a move designed to support the finances of the largest property insurance provider after a public hearing this week.

In early February, the State Farm asked California Commissioner for Insurance Ricardo Lara To approve emergency intermediate increasesSaying that the fires in the Los Angeles country have deteriorated his financial situation as they expected the decision of the insurance department for demands for tariffs, which he filed last summer. The state farm said it expects to pay claims worth over $ 7 billion from these fires.

The Lara Department and the State Farm have reached an agreement before the hearing this week. The result of an unusual hearing in Auckland in the last three days, supervised by the Judge of Administrative Law Carl-Frandric Seligman, will make it an officialS

If the judge approves, from June, the company’s clients will see an average increase of 17% for homeowners – from 22%, which the insurer initially requested after reaching a transaction with the California insurance department; 15% for tenants and apartments; and 38% for rent housing.

It is expected that the judge, who did not give a clear indication of his decision, will issue one as soon as possible, maybe within a few weeks.

If he does not approve the agreement, it is not clear what will happen. The judge works for the insurance department over which Lara has a supreme decision -making body. Lara already has Conditionally approve the intermediate rates

At the hearing, Nicky McKenes, Assistant Bureau of the Bureau for the Application of the Interest of the Department, said during the opening of arguments that the intermediate rates were needed, as “we cannot allow the state farm, with its 20% market share (in California), to go bankrupt.” She said the Department of Work hard to provide discounts from the state farm, including a decrease in the increase in the percentage of homeowners. The insurer will also receive $ 400 million in an unnecessary note from his mother, Mutual State Farm and does not promise new irregularities for more policies by the end of the year.

The actuer of the department Tina Shaw testifies that she agrees to the terms of the transaction between the department and the state farm, although she stated that she did not make any calculations related to the impact of the processed temporary increase in the rate of housing owners, 17%. Shaw said that the lawyer of the department gave her the figure and that she agreed that it was an acceptable intermediate rate in anticipation of a hearing with a full percentage, which should start in June.

She also noted that after the department further examines the company’s finances, if the approved intermediate rate is excessive, the policy holders will be entitled to recovery, with interest from the state farm.

Lara asked questions to the company’s executives about her finances during meeting At the end of February, but he was not satisfied with their answers. He called for the hearing of the public percentage, saying that the company should further prove its case.

The state farm had a failure to try to make it at the hearing this week. The judge disqualified the actuer, which the insurer has hired to testify to justify his requested tariffs, as it turned out that she was also under contract in the insurance department. Both the insurance department and the consumer guard, the advocacy group, which argues against the provision of a request for a state farm rate, raised objections to a possible conflict of interest.

The main arguments witnesses of the state farm made his financial situation, mostly voiced, disclosed earlier information: the state farm said after the fires that he was expecting a $ 1.04 billion surplus by the end of last year by $ 400 million. The surplus of the insurer is his assets minus his liabilities and are assumed to be reserve in the event that other sources of claims are exhausted.

David Apel, an economist, testifies that the ratio of the capital’s capital farm of 150%of the capital size compared to the risk-almost at a time when a regulator may have to intervene to help its solvency. Apel said that “the fact that the largest insurer in the largest country is almost at (a level of regulatory action) is exceptional.”

Apel also repeated what the company has been saying for some time: this is the best, credit rating agency, lowered its credit rating last year and that another agency, S&P, has set a State Farm on a credit clock. As the more increasing decreases can lead to the fact that the state farm does not meet the minimum requirements for the provision of homes with mortgages, Apel said it puts hundreds of thousands of clients on the state farm with mortgages at risk of losing their insurer.

But William Plechar, a leading consumer guard lawyer, said: “Police holders are not investors of insurance companies. They are not here to save insurance companies.” Packer also said in his final argument that the company did not prove its need for an intermediate rate; that instead claims that “is too big to fail.”

Consumer It also claims that according to California approved by the legal insurance law, proposal 103, the insurer can only receive an intermediate rate when it can prove that its current rates are invalid. The group’s actuer, Ben Armstrong, testifies that, according to his calculations, the company did not prove its case – although the state farm’s attorneys point out that in some cases its calculations are in line with theirs and also that he made several mistakes.

Last spring, the State Farm collected premiums for housing owners on average 20%before demanding more increases in the summer. Hearing the full percentage for these requests is scheduled for June 1, on the same day the intermediate rates will come into force.

The state farm and the insurance department have made Armstrong admit that the insurance company’s finances seem to be at risk. But he said that if the state farm receives an intermediate increase in interest rates, another risk is that other insurance companies would also ask for intermediate rates, “stimulating the inaccessibility for California policies.”

In the final argument of the state farm, lawyer Catherine Wellington said that if the company’s intermediate promotions were not approved “at this point in crisis”, it would also be a risk to California policies.

This article was Originally Published on CalMatters and was reissued under Creative Commons Attribution-Noncommercial-Noderivatives License.