State Farm Accused of Inflating Premiums to Benefit Parent Company
State Farm General, California’s largest home insurer, is under fire for allegedly inflating profits by purchasing expensive reinsurance from its parent company, State Farm Mutual, while simultaneously requesting a 30% rate hike. Consumer Watchdog alleges that State Farm General received minimal return on its $2.2 billion reinsurance investment (2014-2023), significantly less than comparable insurers. This questionable reinsurance practice, totaling approximately two-thirds of its purchases from its parent company, is cited as a primary justification for the requested rate increase. The California Department of Insurance is investigating these allegations, seeking clarification on State Farm General’s financial status and reinsurance arrangements before making a decision on the rate hike.
John Q. Hosedrinker