Regulators may seek to suspend State Farm's license, citing widespread mishandling of L.A. wildfire claims

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California regulators may seek to suspend State Farm’s license for up to a year and levy millions in penalties against the insurer, alleging it mishandled January 2025 wildfire claims in Los Angeles County.In an extraordinary step, the Department of Insurance announced Monday that it filed an administrative action against the state’s largest home insurer after an investigation into 220 sample claims found 398 violations of state law in about half of them.“Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives,” Insurance Commissioner Ricardo Lara said in a statement.“That is unacceptable, and we are taking decisive action to hold them accountable.”The department is seeking a cease-and-desist order to stop the insurer from engaging in unfair or deceptive practices — and to possibly suspend State Farm’s “certificate of authority” for up to a year, meaning it could not write policies during that period, department spokesperson Michael Soller said.While the terms of the proposed suspension aren’t clear, the move could prevent the insurer — which covers more than 1 million homes — from issuing new policies at a time when the state is facing an insurance crisis.

Business The California Department of Insurance is launching a “market conduct” exam into how State Farm General, the state’s largest home insurer, is handling claims from the January fires after receiving numerous complaints from policyholders.The case will be heard by a state administrative law judge, who will provide a recommendation to Lara on a possible monetary penalty and whether to carry out the license suspension.State regulators declined to comment on the action or how it might affect policyholders.State Farm on Monday rejected the department’s claims that it engaged in a “general practice of mishandling ...