However, industry observers and consumer advocates express growing concern that insurers, led by giants like State Farm, are attempting to saddle customers with their corporate losses. Critics emphasize that insurance inherently involves risk, rewarding insurers with profits in good years and leaving them responsible for losses in difficult times. Those losses, critics argue, belong on the corporate tax filings—not on policyholders’ bills.
“Insurance companies make calculated bets on risk—that’s their fundamental business model,” says one insurance analyst who requested anonymity.
“When insurers encounter routine business losses, they should not be permitted to shift the burden onto consumers through exorbitant premium hikes. This is especially unjust when Californians have no choice but to purchase their insurance products, regardless of how high the rates climb, because State Law compels them to do so. Such practices demand federal investigation.”
Public outrage is palpable, with many demanding action from California Governor Gavin Newsom and state Insurance Commissioner Ricardo Lara. Lara recently granted State Farm a provisional approval of a separate 22% rate hike request for homeowner policies following major fire-related losses but ordered a public hearing set for April 8.
