California Insurance Commissioner Ricardo Lara responds after State Farm announced it will not renew thousands of policies

Los Angeles (KABC) — After State Farm announced it would not renew more than 70,000 insurance policies in California over the next year, the state's insurance commissioner spoke out.

“This is a real crisis,” said Commissioner Ricardo Lara, who spoke to Eyewitness News on Friday.

High insurance premiums and non-renewal

State Farm, California's largest home insurer, announced it will not renew 72,000 policies in the state starting this summer.

Lara said he wants to take a look at the company's finances, but says keeping it in California is a delicate balance.

“Insurance companies are not like utility companies,” he said. “By law, they don't have to be here, and when we try to over-regulate, we'll see what happened after the Northridge earthquake, when the Legislature came in and tried to over-regulate, and they were no longer writing earthquake insurance in California.”

Carmen Balber of Consumer Watchdog, an organization that has criticized Lara as he tries to do business with insurance companies, has been closely monitoring the latest developments.

“What it tells us is that the insurance commissioner’s plan is not working,” she said.

The group feels there should be new laws.

“We have been urging for years that California require insurers that want to sell home or auto insurance in California to sell to everyone who is doing the right thing and protecting their homes. We urge the Insurance Commissioner to support this policy change,” Balber said. “It must pass through the legislature.”

This happens with a number of companies.

In addition to State Farm, Allstate has stopped issuing homeowners insurance policies to new customers in California in 2022.

Lara said his plan also includes changing the models that insurance companies use to better assess risks and lower prices for those who protect their homes.

“The current model is a black box,” he said. “We will change that to be more transparent.”

“We reduce the risk in these communities, keep the insurers writing, then get more insurers to write, and bring the cost down,” he adds.

If State Farm doesn't renew your policy, notify the California Department of Insurance, Lara said.

“We will make sure you have an insurance expert with you so we can help you transition and connect you with insurance companies that write policies in California,” he said.