A California state senator is urging officials to intensify their efforts against State Farm by focusing on its most profitable area: auto insurance.
Sasha Renée Pérez, who serves regions affected by recent wildfires, criticized California’s largest insurer following revelations from state investigators that the company may have breached the law numerous times in its handling of claims from fire survivors.
“If we are going to halt State Farm’s operations in this state, we should also challenge their ability to issue auto insurance policies, as that’s where their major revenue comes from,” Pérez stated.
In an interview on California Politics 360, Pérez emphasized, “There are still many individuals who urgently need assistance.”
Following persistent advocacy from Pérez, California’s Department of Insurance initiated a probe into how State Farm manages wildfire-related claims — a step she noted was a direct response to the demands of the victims.
“The report’s findings confirmed what fire survivors have been asserting for the past year: State Farm was not handling their claims fairly, unjustifiably delaying them, denying requests for smoke and ash cleanup, and significantly harming communities,” Pérez commented.
Insurance Commissioner Ricardo Lara said State Farm broke state law hundreds of times in a review of just 220 cases.
If regulators determine the violations were willful, the company could face fines of up to $4 million and be barred from writing new policies in California for one year, reported KCRA3.
But Pérez argued that punishment barely scratches the surface.
“A $2 million fine does not match the crime that has been committed, in my opinion,” she said. “We talk about this in numbers, but these are fire survivors.
“Those numbers have a direct impact on whether somebody is able to recover, if somebody is able to go home.”
State Farm has fiercely denied wrongdoing, rejecting claims it systematically mishandled or underpaid wildfire survivors while accusing California’s insurance system of being “dysfunctional.”
“Wildfire survivors deserve real solutions — not a distorted picture of State Farm’s response. We strongly disagree with the Department’s characterization,” State Farm General Insurance Company said in a statement last week.
“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” the insurance giant, which insures over a million in California, added.
When asked if the California Department of Insurance is responsible for the issues with State Farm, Pérez pointed to other parts of the country that have had issues with the insurance company.
“This isn’t new,” she said. “So when they try to put the blame on the state of California to say that’s why they weren’t able to deliver for fire victims, I think that’s absolutely false.”
State Farm has been approached for further comment.
