IE comment; There are serious accusations in the press release below from California Dept of Insurance. Issues may well be settled by lengthy court action, and things could go either way. The bigger downside for residents in the State is that many insurers will simply walk away as large companies like Tesla, Yamaha, Chevron, Palantir, Charles Schwab and many more have already done.
In the end, going back to the days of the Old West where everyone had to fend for themselves after a fire, flood, earthquake or storm, isn’t the solution. There is already enough lawless behaviour, including hundreds of cases of arson, across California as it stands. The answer is probably a kind of Lloyd’s pool type of cover, which at least offers basic agreed payouts on property life, loss of limb, vehicles and hospital stays no exceeding 6 weeks. Both the State and the US Federal government would have to underwrite major/historic buildings and some urban centre infrastructure, but property owners would contribute a percentage each year into the Pool, alongside the State govt. That would probably make the premiums affordable for most property/home owners.
As the Notre Dame fire ( probably arson) in Paris, and Windsor Castle England both proved, some major historic risks are uninsurable, except by the State. That’s why the T&Cs of any new Cat insurance need to be very specific about what is covered, and how the payments are capped. The new scheme also needs to be audited by an out-of-State third party regulator, to prevent fraud, or political pressure reducing payments by California when the Pool has a healthy surplus. That reserve will be needed one day when an earthquake hits.
But IE will make a weary prediction now as the mental health/wildfire season arsonists are fuelling up their jerry cans and heading for forests across NW USA and parts of Canada. Nothing will be done. Nada. Zip. Politicians seem to believe that private companies like insurers should pay for the insane justice systems, which see repeat offenders constantly released after serving light sentences for life-threatening arson, violent looting and commercial premises robbery incidents. Fact is, no private company needs to pick up the tab. They can, and will, simply exit the wildfire – and Commercial sectors – of the insurance market one day.
Here’s the word;
The California Department of Insurance today announced a major enforcement action against State Farm General Insurance Company after an expedited investigation uncovered significant mishandling of insurance claims filed by survivors of the 2025 Los Angeles wildfires. Acting on consumer complaints, Insurance Commissioner Ricardo Lara ordered a Market Conduct Examination that documented a pattern of unlawful behavior in more than half of the claims reviewed.
State Farm policyholders filed approximately 11,300 residential claims related to the Los Angeles wildfires, nearly one-third of the 38,835 claims filed across all insurers, according to the Department’s official claims tracker. The violations identified by the Department indicate that thousands of survivors may have been affected.
“Wildfire survivors came to us for help, and we followed the facts,” said Commissioner Lara. “Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives. That is unacceptable, and we are taking decisive action to hold them accountable.”
The Department’s enforcement action seeks millions of dollars in penalties, considered the largest amount pursued this century following a wildfire disaster. In addition to penalties, the Department is requiring State Farm to take corrective actions to speed up payments and resolve outstanding claims.
“The Los Angeles fires were one of the most destructive disasters in our state’s history. Survivors deserve a fair, timely recovery, not obstacles and delays,” Commissioner Lara said. “We are taking a two-pronged approach: legal action to address State Farm’s conduct, and legislative action to ensure this does not happen again.”
The investigation also highlights the urgency of Commissioner Lara’s sponsored legislation pending in Sacramento that would improve claims handling after a disaster, namely the Disaster Recovery Reform Act (SB 876, Padilla) and the Smoke Damage Recovery Act (AB 1795, Gipson), which aim to strengthen claim handling standards and improve recovery for future disaster survivors.
Examination finds a pattern of delay and denial of claims:
Department examiners reviewed a sample of 220 claims and found 398 violations of state law in 114 of those claims, many of which contained multiple violations. Major violations mirror the delays and denials reported by wildfire survivors to the Department, including:
- Slow and inadequate investigation: State Farm failed to begin investigating claims within 15 days, failed to accept or deny claims within 40 days, and failed to pay accepted claims or provide written notice of the need for additional time within 30 days, as required by law.
- Underpayment of claims: State Farm made unreasonably low settlement offers and underpaid claims.
- Multiple adjusters causing confusion: State Farm failed to assign adjusters within statutory timelines and reassigned adjusters repeatedly, creating what survivors described as “adjuster roulette.”
- Smoke damage claim denials and delays: Smoke damage claims represented nearly half of all consumer complaints. Examiners found that State Farm failed to provide required written denials for hygienist and environmental testing, misclassified testing costs, and misrepresented policy provisions related to inspections.
- Inadequate communication: State Farm failed to respond to policyholders, send required status letters, or provide notice when additional time was needed to determine claims.
Since last January, the Department has recovered more than $280 million from all insurance companies for survivors of the Eaton and Palisades fires through direct intervention. As of March 3, 2026, insurers have paid out more than $23.7 billion to residential, commercial, and auto policyholders impacted by the fires.
Legal action to help survivors now, and legislative action to prevent future harm:
The Department has filed an Accusation and Order to Show Cause against State Farm — the first step toward a public hearing before an administrative law judge. The filing alleges violations of the Unfair Insurance Claims Practices Act and related regulations, including the 398 violations identified in the Market Conduct Examination and 34 additional violations based on consumer complaints.
Under California Insurance Code Section 790.035, penalties may reach $5,000 per violation, or $10,000 for willful violations. Penalties may be imposed by the Commissioner following the administrative hearing.
Commissioner Lara is also sponsoring two major bills to strengthen disaster-related consumer protections:
The Disaster Recovery Reform Act (SB 876, Padilla):
Requires insurers to maintain disaster recovery plans, doubles penalties during declared emergencies, mandates restitution to policyholders, and addresses delays caused by multiple adjuster reassignments.
The Smoke Damage Recovery Act (AB 1795, Gipson):
Establishes California’s first enforceable public health and insurance standards for smoke-damaged homes, including science-based testing and restoration requirements.
Both bills advanced through legislative hearings in April and are now before the Senate and Assembly Appropriations Committees.
Wildfire survivors experiencing delays, disputes, smoke damage issues, or other claim problems are encouraged to file a formal complaint with the Department of Insurance at insurance.ca.gov or by calling (800) 927-4357.
Separate from today’s action, the California Department of Insurance, Consumer Watchdog, and State Farm General recently reached a three-party settlement agreement over State Farm’s emergency rate request, currently under review by an impartial Administrative Law Judge.
At a later date, Consumer Watchdog may submit a request for intervenor compensation for its participation in the rate review and settlement process, as authorized under Prop. 103. If approved, the compensation amount – to be paid by State Farm policyholders – will be determined through a separate review process. Learn more about the intervenor compensation process at the Department’s website.
Be the first to comment