A California state senator has called for officials to escalate its war on State Farm by targeting its most lucrative sector — auto insurance.
Sasha Renée Pérez, who represents communities devastated by recent wildfires, blasted California’s largest insurer after state investigators found it may have violated the law hundreds of times while handling fire survivor claims.
“I think if we’re going to pause State Farm’s ability to be able to operate in this state, we also need to go after their ability to write auto insurance policies because we know that’s where they make the majority of their money,” she said.
“We still have a whole population of people who desperately need help,” Pérez said during an interview on California Politics 360.
After months of pressure from Pérez, California’s Department of Insurance launched an investigation into State Farm’s handling of wildfire-related claims — a move she said was exactly what victims had been demanding.
“The findings of the report proved what fire survivors had been saying for the past year, which is that State Farm was not treating them fairly, they were continuing to delay claims without justification, continuing to deny requests for smoke and ash remediation, and really causing harm to communities,” Pérez said.
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.
