California officials seem receptive to State Farm Insurance's emergency rate hike request at Oakland hearing
State Farm -- the state's largest insurer -- is asking California's Department of Insurance for a 17% emergency rate hike.
But first, they will have to convince a judge.
The company has already put in other rate requests over the past year, but this emergency request comes as a direct response to the
deadly Los Angeles County wildfires
in January which destroyed more than 18 buildings -- most of them homes.
State Farm estimates it will have to pay out roughly $7.6 billion to fire survivors. The company says those payouts will deplete its reserves.
A consumer watchdog argues policy holders shouldn't be on the hook.
While there wasn't a lot of drama on the first day of the hearing, it is part of a process that will likely dramatically increase the amount it costs to buy homeowners insurance in California
With catastrophic wildfires becoming commonplace in California, the home insurance market is in crisis. State Farm says it's been slowly losing money for the last ten years. On Tuesday in Oakland, its lawyers sat before Administrative Law Judge Karl Seligman to argue that an interim rate hike is justified to keep the company solvent.
"State Farm General's surplus, which is the money that's available to pay claims, has fallen from about $4 billion in 2015 to about $1 billion in 2024," said State Farm counsel Katherine Wellington. "Following the fires in Los Angeles, State Farm General has estimated that its surplus will decline to about $600 million."
They said that's not nearly enough to pay claims if another disaster should strike. There are even warnings that the company's policies soon may not be acceptable to some lenders for people seeking mortgage loans. The company is asking Insurance Commissioner Ricardo Lara for the emergency rate hike that would be imposed on all State Farm policy holders statewide to refill its cash reserve.
At the hearing, state officials seemed sympathetic to the idea.
"It is not in California consumers' best interest to allow State Farm General, the largest property insurer in California by far with 20% market share, to go bankrupt or to otherwise withdraw from the California market," said California Department of Insurance attorney Nikki Kennedy.
Harvey Rosenfield, founder of the state and national advocacy group
Consumer Watchdog
, argues otherwise. The group was also party to the hearing. Rosenfield said Prop 103, which regulates the state's insurance market, requires that companies first prove that they need rate increases. He says State Farm has been reluctant to do that.
"The way it's been engineered by State Farm, it's a fast track," said Rosenfield. "They want the commissioner to approve their rate increase now, and then figure it out later whether it was justified or not. That's not how the law works in California."
There's reason to be skeptical. State Farm was requesting a 30% increase last June, before the Los Angeles county wildfires. After the fires, they initially reduced that amount to 22%. Now that they're being required to show proof, they announced at the hearing that they've lowered the request to 17%. As a result, Consumer Watchdog attorneys asked the judge to strike the evidence being presented.
"We've been demanding this information for nine months. And last night, on the eve of this hearing, State Farm sent us six documents," said Rosenfield. "We haven't even had a chance to look at it."
However, industry expert Karl Susman told CBS News Bay Area he thinks Consumer Watchdog is just stalling the process.
"Can we just get the facts here?" Susman asked. "If they need the rate increases, show us the proof. Nobody cares if it was submitted an hour late or a day late. If the proof exists, let's see it. Let the insurance commissioner decide what he's going to do."
Lara may have already decided. He gave
provisional approval of the 22% rate hike last month
and said he will let the judge decide if it's justified. At the hearing, the California Department of Insurance's lawyers were clear on the state's position.
"Normal rules don't apply," said Kennedy. "We're on the Titanic and we see the iceberg. Now is not the time to argue about where to put the deck chairs. There is still time, your honor, to turn this ship around. If we don't, over three million Californians are going in the water. And there are not enough life boats."
It's probably not a stretch to compare California's insurance market to a sinking ship. Now the judge will decide if State Farm's claims of poverty actually hold water.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
San Francisco Chronicle
a day ago
- San Francisco Chronicle
UC admits more California freshmen than ever — but fewer at top campuses
The University of California admitted more than 100,000 California first-year students for fall 2025 — a systemwide record — even as the most selective campuses extended fewer offers to in-state applicants. According to data released Monday by the UC Office of the President, 100,947 California residents received offers of admission, a 7.4% increase over last year's total of 93,990. The admission rate for California students rose to 77%, up from 70% in 2024. 'We continue to experience significant growth — a clear indication that Californians recognize the value of a UC degree,' UC President Michael V. Drake said in a statement. Four of the UC system's nine undergraduate campuses — Merced, Riverside, Davis and Santa Cruz — accounted for the increase in first-year admissions of California students. UC Merced in particular saw a whopping 71.9% surge in admissions of in-state students, after a 45% increase in applications following several changes that made it easier for students to apply and enroll there. UC Riverside also had a robust 46% increase in admissions of California students. Admissions of in-state first-year students fell slightly at its most competitive campuses: Berkeley, UCLA, San Diego, Irvine and Santa Barbara. Systemwide, UC admitted 149,368 first-year students from a pool of 205,348 applicants, increasing the overall admission rate to 73% from 66% last year, though not all are expected to accept the offer. Offers to domestic nonresidents rose by 9%, while international offers grew by 17%, despite lower anticipated enrollment from those groups. Among California admits, 41.8% reported low family incomes, up from 40.6% last year. While the proportion of first-generation college students dipped slightly to 42.4%, the actual number rose by more than 2,300. Admissions officials attributed the increase to the university's adherence to the California Master Plan for Higher Education, which guarantees admission to a UC campus for students in the top 9% of their high school class or statewide, regardless of standardized test scores. UC Berkeley, one of the most competitive campuses, admitted approximately 14,500 first-year students — 787 more than in 2024 — from a record 126,798 applicants. The campus also admitted more than 5,600 transfer students. Among freshman admits, 68% come from California and one in four identify as first-generation students. 'At Berkeley, we seek to find the most exceptional students wherever they are in the state, country or world, and it's especially rewarding when we can offer admission to more of these incredible students,' said Olufemi Ogundele, Berkeley's associate vice chancellor and dean of enrollment, in a statement. UC Davis admitted 55,739 undergraduate students for fall 2025, an 8.6% increase over the previous year. The total includes a record 45,963 first-year admissions — up 10.4% — and 9,776 transfer admissions, a slight increase from 2024. Of those admitted, 34,088 are California residents, representing 61.1% of the admitted class. The gains in admissions support UC's broader 2030 plan, which aims to gradually expand capacity for California undergraduates over the next five years.
Los Angeles Times
a day ago
- Los Angeles Times
Under pressure, UC admits a record number of Californians; racial diversity remains strong
UC admitted its largest class of California undergraduates for fall 2025, while also maintaining a diverse student body and increasing the number of students who are the first-generation in their family to attend college, according to preliminary data released Monday. The University of California also offered admission to 17% more undergraduate international students, a group which has come under scrutiny from the Trump administration with increased vetting and visa delays. The strategy in raising international student admits took into account that UC raised nonresident tuition fees last year and that White House actions will likely mean fewer foreigners will decide to study in the U.S. in the fall. The bigger pool of admission offers aims to capture a large enough group of students who will enroll and bring the international diversity UC values — as well boost coffers with the full-price tuition paid by non-California residents. Overall, UC admitted 100,947 first-year California students, up more than 7% from last year. The number represents the largest admitted class to the nation's premier public university system as leaders address public demands to give more seats to Californians — despite the allure of charging higher tuition to out-of-state students during tough budgetary times. UC is grappling with a hiring freeze, layoffs, deferred state funding, campus-level structural deficits, potentially costly union contract negotiations and talk of tuition increases. Questions loom over billions in federal grants amid Trump administration claw-backs and multiple federal government investigations probing allegations regarding antisemitism, use of race in admissions and sources of foreign funding. The system-wide admission rate for California first-year students — even taking in highly competitive campuses including UCLA and Berkeley — increased to 77% from 70% last year. Overall, UC offered seats to 180,382 first-year and transfer students from California and other states and nations. At UCLA, the nation's most applied-to university, the admit rate remained roughly the same at 9%. UCLA offered admission to 8,575 California first-year applicants for fall 2025, down by more than 200 students over last year. Like in previous years, the number represented the smallest set of offers among UC campuses. Monday's data focused only on admitted students — not those who will end up accepting offers and enroll. Thus, the numbers are higher than campus capacities. 'We continue to experience significant growth — a clear indication that Californians recognize the value of a UC degree,' said outgoing UC President Michael V. Drake. 'Our latest admissions numbers demonstrate that families across our state recognize that UC degrees prepare students for a lifetime of meaningful contributions in their communities and far beyond.' Drake, a physician, will leave his role at the end of July to return to research and teaching. James B. Milliken, the former University of Texas Chancellor, will replace him. 'Creating pathways to a UC education for a wide range of top California students yields benefits not only for those students, but for the state at large,' said Han Mi Yoon-Wu, UC associate vice provost and executive director for undergraduate admissions. 'We are proud to offer these exceptional young people a place at the University of California.' The data released Monday continues years-long UC trends of increasing racial diversity, first-generation students, those from lower-income families, and transfers from California community colleges. In recent years, UC has touted the racial and ethnic mix of its admitted students as a better reflection of California demographics — even as diversity programs nationwide have come under political and legal attack, and the Supreme Court ruled in 2023 that affirmative action in college admissions was unconstitutional. In California, Proposition 209, approved by voters in 1997, bans the consideration of race in admission to public education institutions. Over the years UC has moved to recruit a diversity of students and in the early 2000s, launched two major reforms. One focuses on an admission guarantee to top-performing students statewide and at most California high schools. The other evaluates applicants using a comprehensive review process — including special talents, how a student compares to peers in their high school, and geographic location — in addition to grades and coursework. This year, as the Trump administration has criticized campus diversity programs, UC's messaging around admissions has been quieter about race. A press release on admissions data did not refer to the racial make-up of admitted students, as it has in the past several years — although racial data was included in detailed admissions tables. Earlier this year, the Trump administration said it was investigating UCLA, UC Berkeley and UC Irvine of using 'illegal DEI' in admissions and suggested the system's faculty diversity goals amounted to race-based hiring discrimination. The Justice Department zeroed in on a 'UC 2030 Capacity Plan' that charts out desires to increase diversity among graduate students and faculty, including adding 1,100 tenure-track faculty. UC has vigorously defended it admissions practices and said it abides by state and federal laws. Monday's UC data showed increases in admits of all racial groups: Black, Latino, Native American, Asian American, Pacific Islander, white and 'unknown.' The growth happened despite the total applicant pool declining slightly — by less than 1% — to 249,824. For the sixth consecutive year, Latinos were the largest group of admitted first-year California students, primarily because of their high numbers accepted by UC Merced and UC Riverside. At the other seven undergraduate campuses, Asian Americans were the leading admitted group. Overall, Latinos made up 39% of first-year Californians admitted, followed by Asian Americans at 33%, white students at 18%, Black students at 6%, Native Americans at roughly 1% — or 604 people — and Pacific Islanders at less than 1% with 294 people. As it was last year — following national trends in higher education — women admits outweighed men. Across UC campuses, 54% of admits for the fall were women, 42% were men. In addition, 1% were nonbinary, less than 1% each were transgender men or women, and 3% were of a different or unknown gender identity. UC Berkeley and Davis, where 57% of admits were women, had the biggest gender divides. While UC's overall admission data showed increases in the number of students offered slots, the campus-by-campus data varied widely. Most campuses only increased admits by a few hundred or few thousand students. The bulk of admissions growth was dominated by UC Merced and UC Riverside. At Merced, UC's newest campus, overall admissions grew more than 60% to 50,662 from 31,585 last year. At Riverside, admissions jumped greater than 38% from 51,345 to 71,069. Part of the increase reflected targeted recruiting for those campuses, Yoon-Wu said in an interview. 'One of the changes this year was focusing on students who perhaps were not familiar with those two campuses and getting them in as applicants early on,' she said. Merced saw the biggest growth in applications this year with a 45% increase to to 51,745. The second-biggest increase was at Riverside, jumping 18% to 82,904. Both campuses have been expanding and do not face the same restrictions of some high-profile UCs that are surrounded by dense urban areas with relatively high housing costs, such as UCLA and UC Berkeley. Riverside, which is undergoing housing expansion, aims to enroll 35,000 students by 2035 — an increase of roughly 9,000 from last fall. Merced has a enrollment goal of 15,000 by 2030, which would be a growth of roughly 6,000 from last fall. Merced and Riverside campuses also have the highest admission rates in UC and are among the most diverse when it comes to race, first-generation status and student income levels. In addition, the campuses also have low yield rates — the percentage of admitted students who choose to enroll. At Merced, the overall first-year student yield rate last year was 7%. At Riverside, it was 12%. Systemwide, the number of low income students and those who are the first in their family to attend college was relativity stable. Low income students made up 42% of the admitted first-year California class, a 1% increase over last year. First generation students also made up 42%, a 1% decrease. The system made gains in expanding access to California Community College transfer applicants. It offered admission to 27,845 — 5.9% more than last year. UC began adding more out-of-state students, who pay higher tuition, after funding cuts during the Great Recession. In recent years, under public pressure and amid state budget deals, it has steadily increased California admissions and enrollment. The latest admissions data showed an increase of 2,150 first-year admission offers to 26,191 — a growth of 9% — students who are residents of other states. At the same time, 3,263 more first-year international students were offered seats, an increase of 17% over last year. UC said that both numbers were higher due to 'rising uncertainty of their likelihood of enrollment' and noted that share of accepted students in the groups who choose to enroll is generally 'substantially lower' than that of California residents. Yoon-Wu said there were 'many factors' that contributed to the system wanting a larger pool of nonresident admits. She noted that that cost of being a non-Californian at UC has gone up. Last fall, the UC Board of Regents approved a 10% increase of the 'nonresident' tuition fee from $34,200 to $37,602. 'This year, there is more uncertainty about how people are feeling about higher education,' Yoon-Wu said, adding that changes in the Trump administration are 'definitely' a factor on student minds. 'Luckily for the University of California, we have proven that getting a degree from UC is a valuable decision.'
Chicago Tribune
2 days ago
- Chicago Tribune
Damaging, golf ball-size hail will fall more frequently because of climate change, Illinois researchers warn
During severe thunderstorms, rising air shoots icy pellets the size of Dippin' Dots ice cream into the bitter cold of upper atmospheric layers. There, supercooled water freezes onto the small particles to form hail, which then falls when it gets too heavy for the storm's upward draft. As climate change warms average global temperatures, hailstones larger than pingpong or golf balls will become more frequent — likely worsening the weather hazard's already billions of dollars in annual property damage across the country, according to a study published last year in the scientific journal npj Climate and Atmospheric Science. 'Climate change is obviously occurring,' said Victor Gensini, a meteorologist and professor of atmospheric science at Northern Illinois University who led the study. 'The question, for scientists, is often: How does that manifest itself (in) these smaller-scale extreme weather perils?' Insurance companies have reported rising hail damage claims from homeowners due to severe storms. In 2024, roof repair and replacement costs totaled nearly $31 billion across the country, up almost 30% from 2022, according to an April report from Verisk, a risk assessment and data analytics firm. Hail and wind accounted for more than half of all residential claims. State Farm is raising homeowners insurance rates in Illinois by 27.2% beginning Aug. 15, according to a filing with the state last month. The rate hike, one of the largest in the state's history, will affect nearly 1.5 million policyholders. In addition, State Farm is implementing a minimum 1% deductible on all wind and hail losses, raising the out-of-pocket costs for homeowners filing a related damage claim. State Farm said its Illinois homeowners business has seen 'unsustainable' losses in 13 of the last 15 years and cited more frequent extreme weather events such as wind, hail and tornadoes, insufficient premiums to cover claims and the rising cost of repairs due to inflation. Last year, State Farm customers in Illinois reported $638 million in hail damage, ranking the state second after Texas. In May, roughly 100 researchers — including Gensini and other NIU scientists — kicked off the world's largest-ever coordinated effort to study hail in and around the Central Plains. But 'we will go wherever the storms are,' he said in a previous interview. The work is being supported with $11 million from the National Science Foundation and aims to improve forecasts of severe, damaging hail using data collected through technology such as drones, weather balloons, meteorological instruments that measure hailstone size and strike impact, and more. Better detection and prediction would allow people to protect themselves, their property and their livelihoods, preventing millions of dollars in losses. Between mid-May and the end of June, scientists tracked 28 hail events across 11 states in the Midwest, South and Mountain West. They recorded hail bigger than 3 inches in Colorado, Texas, Montana and South Dakota. Recent cuts to federal grants from the Trump administration have paused scientific endeavors in many areas, including weather forecasting, but organizers said the NIU-led study was not affected because funding was awarded last summer. Northeast Illinois has had its share of big hail this year, too. An early spring thunderstorm produced tornadoes and dropped pea-size hail across the area in mid-March; the largest hailstones reported were as big as half dollars in central Cook County. On May 15, 3-inch hail was observed in Livingston County, and 2-inch hail was also reported in northeast Lake County. Batavia was pelted by hail as big as tennis balls during a June supercell. According to the National Weather Service, for the last 30 years, the Chicago area has averaged 11 days of any size hail per year and two days of significant stones with diameters 2 inches or larger. In their study, published in August 2024, NIU researchers found that days with severe hailstorms with larger stones will increase most significantly in the Midwest, Ohio Valley and Northeast by at least five days from mid- to late-century. 'Depending on how hard you press the gas pedal — the gas pedal being human emissions of CO2 — that has a really big impact on hail that we see and, ultimately, where it occurs,' Gensini said. 'On average, we see bigger hail, more frequent bigger hail, and we actually see less small hail.' Using a model with high-resolution mapping offered researchers new, more granular insights into the future of individual storms and their hazards compared with the data that traditional global models produce, which Gensini characterized as coarse and grainy. 'It would be like the difference of a cellphone camera from back in the early 2000s compared to what we have now,' said Jeff Trapp, professor of climate, meteorology and atmospheric sciences at the University of Illinois at Urbana-Champaign. According to Gensini, a warmer climate concentrates more water vapor in the atmosphere, which in turn fuels thunderstorms and makes them more robust — with stronger updrafts that can suspend bigger hailstones. 'Take a hair dryer and turn it up on end, so it's blowing air straight up,' he said. 'It's pretty easy to suspend a pingpong ball right above that hair dryer. But now, what if you wanted to suspend a grapefruit or a soccer ball? You're going to need a much stronger updraft.' Warmer temperatures in the lower atmosphere would also melt smaller hailstones that fall at a slower speed, while really big stones would remain relatively unaffected. The model used in the study indicated a more than 25% increase in the frequency of large hailstones of at least 1.8 inches if planet-warming greenhouse gas emissions from human activities do not significantly reduce by mid-century. In that same scenario, stones larger than 2 inches could increase by over 75% by the end of the century, and there would be fewer hailstones smaller than a golf ball, or 1.7 inches. The National Weather Service considers severe any hail bigger than a quarter or with more than a 1-inch diameter. Anything larger than 2 inches can easily damage roads, dent cars and shred crops. Stones larger than 4 inches are called giant hail, and those larger than 6 inches are called gargantuan hail. Theoretically, the maximum size could be over 9 inches in diameter, like a bowling ball. The largest recorded hailstone in the country fell on June 23, 2010, in Vivian, South Dakota. It had an 8-inch diameter and weighed 1 pound and 15 ounces. The largest hailstone reported in Illinois was about 4.75 inches, the size of a softball, and fell on June 10, 2015, near the village of Minooka, 50 miles southwest of Chicago. Having researched severe storms, their hazards and their connection with climate change for decades, the U. of I.'s Trapp emphasized the need to study potential changes in hail's seasonality, too — even though 'there's not really a hail season, but there are times of the year that are more conducive to (it).' In Illinois, that's typically during the spring and early summer. 'This is an important question, I think, ultimately, to address,' he said. 'For people who do emergency management, as an example, so that they know that in the coming years, maybe the coming decades, there might be an expectation that their activity will be enhanced during an earlier or different time of the year. And we're seeing that with severe weather in general.' No matter the changes in hail size and frequency, the NIU researchers noted that the effects of this weather hazard — mainly in the form of losses and damages — will only grow as an increasingly urbanized landscape leaves more people and their property vulnerable to the pelting stones. Gensini called hail an understudied, 'underappreciated' storm peril. According to Verisk, noncatastrophic wind and hail roof claims increased from 17% to 25% between 2022 and 2024, which the company says highlights the growing impact of these perils despite the greater focus often placed on catastrophic events. 'Tornadoes are incredibly dramatic; they can produce casualties and fatalities. You generally just don't see that with hail; (stones have) impacts (on) assets and structures, and not necessarily people or their livelihood. But the trade-off of that is hail is way more frequent, way more common,' Gensini said. 'And because of that frequency, we see way more damage and way more impact, in terms of insured losses from hail, every single year.'
