Lara launches investigation into State Farm’s wildfire claims handling

By David Bull

June 13 - (The Insurer) - California Insurance Commissioner Ricardo Lara has announced an investigation into State Farm’s handling of insurance claims related to the Palisades and Eaton wildfires and urged insureds to make their own formal complaints.

The state’s insurance department said it has initiated a market conduct examination of the insurer’s California unit State Farm General Insurance Company, expanding its ongoing investigation into consumer complaints against the company.

Lara said: “Californians deserve fair and comprehensive treatment from their insurance companies. No one should be left in uncertainty, forced to fight for what they are owed, or face endless delays that often lead consumers to give up.”

He said that while there are national standards for insurance claims handling, they can be “vague and inconsistently applied”, especially during large-scale, climate-driven disasters.

“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,” Lara continued.

The statement said a market conduct examination typically takes several months to complete.

It added that while the California insurance department has received general allegations from wildfire survivor groups in relation to State Farm’s processing of claims, a formal complaint is required for it to take action and advocate for consumers.

"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. These issues create unnecessary stress, prolong recovery, and erode trust," said Lara.

“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.”

State Farm said late last month that it is seeking an additional rate increase for its California unit following the approval by Lara’s department of an interim 17% rate increase.

The insurer has been in a battle with the regulator over its rate increase requests after taking heavy wildfire losses.

As of May 20, 2025, State Farm General had paid out almost $3.6 billion on more than 10,450 fire claims and expects to ultimately issue around $7.6 billion in total claim payments.