A fire survivors’ group announced Thursday it was seeking tougher penalties against State Farm over its handling of January 2025 wildfire claims.
The Every Fire Survivor’s Network said it was petitioning to join a state enforcement action announced this year against the company to make sure the case results in meaningful changes at California’s largest home insurer.
“We’re seeking a systematic review of all their claims and penalties calibrated to the actual scale of the harm — and we’re seeking the payouts that families are owed,” said Joy Chen, executive director of the group, at a Pacific Palisades news conference joined by victims of the fires.
The Department of Insurance in May filed an administrative action against State Farm General — the subsidiary of the giant Bloomington, Ill., insurer that handles California home insurance — after completing a “market conduct” exam.
The Jan. 7, 2025, fire damaged or destroyed more than 18,000 structures and killed 31 people.
State Farm has received more January 2025 claims than any other insurer — more than 13,700 auto and homeowners claims as of May 4, with payouts totaling $5.7 billion, according to the company.
The market conduct exam looked at 220 sample claims filed by the victims and found 398 violations of state law in about half of them.
Among other alleged violations, it found that the company failed in numerous cases to pursue a “thorough, fair and objective investigation” into claims, failed to come to “prompt, fair, and equitable settlements” and made settlement offers that were “unreasonably low.”
In announcing the action, Insurance Commissioner Ricardo Lara called the company’s claims handling “unacceptable” and said his department was taking “decisive action to hold them accountable.”
The state is seeking a “cease and desist” order to stop the insurer from engaging in unfair or deceptive practices.
It also has threatened to suspend State Farm’s license over the alleged violations, which each carry a penalty of up to $5,000 — or twice that figure if found to be willful. That could amount to a penalty of $2 million or more.
The threat to actually suspend State Farm’s license and its authority to write policies has been viewed skeptically by some, given its roughly 20% market share of the state’s home insurance market.
The company, which had an opportunity to include its responses in the exam report, denied fault in some cases and admitted fault in others. It often blamed problems on individual adjusters and denied systemic issues with its claims handling.
The petition filed by the wildfire survivor’s group criticizes the sample size of the market conduct exam as too small to capture all the alleged deficiencies in State Farm’s claims handling, which it claims are a “general business practice” of the company.
The group is seeking to conduct discovery, cross examine witnesses, present testimony from fire victims and bring more that 1,600 firsthand policyholder statements regarding State Farm’s practices into evidence, according to the petition.
It also wants State Farm to reopen cases in which claimants were paid too little, and it is seeking to participate in settlement discussions in order to increase any penalty State Farm would pay.
It calculated that a $2-million penalty would amount to a minute fraction of the assets of the State Farm Group.
“I submit to you that doesn’t defer bad conduct, it just allows you to continue to do it,” said Michelle Meyers, an attorney for Every Fire Survivor’s Network, at the news conference.
Consumer Watchdog, which has been a harsh critic of State Farm, also is providing legal support for victims’ effort.
Sevag Sarkissian, a spokesperson for State Farm, said the company was aware of the petition.
“We recognize that many wildfire survivors, including those that are State Farm General policyholders, continue to face difficult recovery challenges,” he said. “Our focus remains on helping customers recover.”
Michael Soller, a spokesperson for Lara, said the department is “acting with urgency to assist wildfire survivors in their ongoing recovery by investigating formal complaints filed by survivors and conducting the expedited market conduct exam that led to this enforcement action.”
He added that the department’s position is the state’s Administrative Procedure Act does not contemplate the commissioner or department staff authorizing intervention requests in the case.
He said that would be a hearing officer’s or administrative law judge’s decision when one is assigned to the case.
Meyers acknowledged the request was novel but said her reading of the law is that Lara can make the decision because no judge is yet assigned.
In response to the criticism, State Farm pledged earlier this year to improve its claims handling, including by providing single points of contact and improved communication so there are “fewer handoffs, fewer repeated explanations, and seamless support.”
It also named a new vice president of customer relations for State Farm General.
A fire survivors’ group announced Thursday it was seeking tougher penalties against State Farm over its handling of January 2025 wildfire claims.
The Every Fire Survivor’s Network said it was petitioning to join a state enforcement action announced this year against the company to make sure the case results in meaningful changes at California’s largest home insurer.
“We’re seeking a systematic review of all their claims and penalties calibrated to the actual scale of the harm — and we’re seeking the payouts that families are owed,” said Joy Chen, executive director of the group, at a Pacific Palisades news conference joined by victims of the fires.
The Department of Insurance in May filed an administrative action against State Farm General — the subsidiary of the giant Bloomington, Ill., insurer that handles California home insurance — after completing a “market conduct” exam.
The Jan. 7, 2025, fire damaged or destroyed more than 18,000 structures and killed 31 people.
State Farm has received more January 2025 claims than any other insurer — more than 13,700 auto and homeowners claims as of May 4, with payouts totaling $5.7 billion, according to the company.
The market conduct exam looked at 220 sample claims filed by the victims and found 398 violations of state law in about half of them.
Among other alleged violations, it found that the company failed in numerous cases to pursue a “thorough, fair and objective investigation” into claims, failed to come to “prompt, fair, and equitable settlements” and made settlement offers that were “unreasonably low.”
In announcing the action, Insurance Commissioner Ricardo Lara called the company’s claims handling “unacceptable” and said his department was taking “decisive action to hold them accountable.”
The state is seeking a “cease and desist” order to stop the insurer from engaging in unfair or deceptive practices.
It also has threatened to suspend State Farm’s license over the alleged violations, which each carry a penalty of up to $5,000 — or twice that figure if found to be willful. That could amount to a penalty of $2 million or more.
The threat to actually suspend State Farm’s license and its authority to write policies has been viewed skeptically by some, given its roughly 20% market share of the state’s home insurance market.
The company, which had an opportunity to include its responses in the exam report, denied fault in some cases and admitted fault in others. It often blamed problems on individual adjusters and denied systemic issues with its claims handling.
The petition filed by the wildfire survivor’s group criticizes the sample size of the market conduct exam as too small to capture all the alleged deficiencies in State Farm’s claims handling, which it claims are a “general business practice” of the company.
The group is seeking to conduct discovery, cross examine witnesses, present testimony from fire victims and bring more that 1,600 firsthand policyholder statements regarding State Farm’s practices into evidence, according to the petition.
It also wants State Farm to reopen cases in which claimants were paid too little, and it is seeking to participate in settlement discussions in order to increase any penalty State Farm would pay.
It calculated that a $2-million penalty would amount to a minute fraction of the assets of the State Farm Group.
“I submit to you that doesn’t defer bad conduct, it just allows you to continue to do it,” said Michelle Meyers, an attorney for Every Fire Survivor’s Network, at the news conference.
Consumer Watchdog, which has been a harsh critic of State Farm, also is providing legal support for victims’ effort.
Sevag Sarkissian, a spokesperson for State Farm, said the company was aware of the petition.
“We recognize that many wildfire survivors, including those that are State Farm General policyholders, continue to face difficult recovery challenges,” he said. “Our focus remains on helping customers recover.”
Michael Soller, a spokesperson for Lara, said the department is “acting with urgency to assist wildfire survivors in their ongoing recovery by investigating formal complaints filed by survivors and conducting the expedited market conduct exam that led to this enforcement action.”
He added that the department’s position is the state’s Administrative Procedure Act does not contemplate the commissioner or department staff authorizing intervention requests in the case.
He said that would be a hearing officer’s or administrative law judge’s decision when one is assigned to the case.
Meyers acknowledged the request was novel but said her reading of the law is that Lara can make the decision because no judge is yet assigned.
In response to the criticism, State Farm pledged earlier this year to improve its claims handling, including by providing single points of contact and improved communication so there are “fewer handoffs, fewer repeated explanations, and seamless support.”
It also named a new vice president of customer relations for State Farm General.
