California insurance commissioner Ricardo Lara has launched a formal investigation into State Farm, following mounting complaints about the company’s handling of claims from the Eaton and Palisades wildfires.
The move, announced this week, follows months of pressure from policyholders and advocates.
Joy Chen, a former Los Angeles deputy mayor and leader of the Eaton Fire Survivors Network, said the announcement is a relief.
“The fact that an investigation is finally underway and long overdue is an important milestone. It should never have been that hard,” Chen said. “But it is a testament to the power of survivor voices.”
The California Department of Insurance will be conducting an investigation called a “market conduct examination.” It is a tool used when there is a large number of consumer complaints, which can determine if an insurer has followed laws and regulations guiding how they should fairly handle claims.
“While there are national standards for insurance claims handling, they can be vague and inconsistently applied, especially during large-scale, climate-driven disasters,” Commissioner Lara said in a statement announcing the investigation. “These issues create unnecessary stress, prolong recovery, and erode trust.”
The results of the investigation will help determine if reforms are needed, according to the statement.
Chen said she noticed a troubling pattern on the Discord channels that the Eaton Fire Survivors set up to allow Altadena neighbors to share information and support. The group has over 50 moderated channels, she said, and half of those are dedicated to insurance.
“Back in February, we set up a separate channel for each insurance carrier. And late March, early April, I noticed something that was really shocking,” Chen said.
“Whether a family was on the road to recovery, like my family, or not, depended largely on which insurance carrier they were with. And these are all families who paid faithfully their premiums for years or decades. And State Farm was the worst of the worst.”
She collected nearly 400 complaints and summarized their contents in a letter (PDF) to Commissioner Lara, which was sent last month. Common complaints included frequent reassignments of adjusters on a claim, with little continuity in record keeping, refusal to test contaminated homes, low-balled estimates of damage and non-payment of living costs. The pattern, she said, added up to systemic tactics to discourage policyholders from pursuing claims.
At the time, the department of insurance was just about to allow State Farm to move forward with an emergency rate hike. Chen’s group urged a delay in the rate decision until Lara investigated whether State Farm was fulfilling its contracts with policyholders. She said over 600 people signed the letter, and survivor complaints have continued to flow into her inbox.
Meanwhile, State Farm is pursuing another rate increase.
Chen’s group is urging Commissioner Lara to make public the results of the investigation, including whether State Farm complies with the law, before considering further rate adjustments.
The Department of Insurance did not respond to requests for comment in time for publication.
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