Farmers Insurance Group drops another rate hike as 1M California customers despair

A popular home insurer in California is hiking rates for homeowners this fall.

Farmers Insurance Group, known for its “We are Farmers” jingle with actor JK Simmons, will raise rates by 1.5% at the next renewal date in September.

The change will affect the insurers’ nearly 915,000 homeowners, according to a filing with the California Department of Insurance.

Customers may see differing changes, with some seeing higher rate hikes or others potentially seeing their rates decrease.

It was the companies’ first filing under a new set of regulatory reforms called the Sustainable Insurance Strategy, which alters how companies price wildfire risk. Farmers initially tried for a 6.9% hike, but regulators reduced it to 1.5%.

The company began capping the number of new policies it wrote in California in 2023. It appeared to be optimistic about the insurance market in California.

“We continue to see encouraging signs that the California insurance marketplace is strengthening and we want to be well-positioned to grow and provide improved coverage offerings to California consumers,” Behram Dinshaw, Farmers’ president of personal lines insurance, said in a statement.

“Farmers is proud to be one of the few home insurers that never stopped offering new home policies in the state and we remain committed to the California marketplace.”

Two other major insurers in California have also sought to ramp up rates for homeowners.

The AAA-affiliated Interinsurance Exchange of the Automobile Club applied to raise rates for homeowners by 11.2%, and Travelers Insurance is looking to increase its rates by 6.9%.

Only about a quarter of customers would see a rate decrease under Travelers’ proposal, while roughly 60% of homeowners would get slapped with a bigger bill. 

The two insurance companies combined cover about 760,000 homes in the state. 

“As a company founded in California more than a century ago, we believe helping to ensure insurance sustainability is the right thing to do for our members and for the future of our state,” Mike Mohamed, the Auto Club’s senior vice president of insurance operations, told the Chronicle in a statement.

Filings for Travelers Insurance, Horace Mann Insurance, and the Interinsurance Exchange of the Automobile Club are currently under review.

Other rate hikes approved under the SIS plan include 6.9% increases for Mercury Insurance, USAA, Pacific Specialty Insurance Co., California Casualty Insurance, and CSAA.

The nine insurers combined have committed to writing at least 15,000 new policies over the next two years.

“This is exactly the kind of sustained momentum we need to restore stability to California’s insurance market,” Insurance Commissioner Ricardo Lara said.

“More companies are stepping up, writing more policies, and committing to long-term growth. That means more choices for homeowners and a stronger path off the FAIR Plan.”

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