California regulator moves to suspend State Farm General’s authority to operate

California’s Department of Insurance (CDI) has opened a regulatory action against State Farm General Insurance Company that could result in the suspension or revocation of the insurer’s Certificate of Authority to operate in the state.

The department said the action relates to State Farm’s alleged failure to comply with a 2022 order to provide underwriting, rating and claims information. On May 29, 2024, the CDI issued an Order to Show Cause requiring State Farm to explain why its license should not be suspended or revoked.

Data dispute tied to market conduct exam The CDI said the information request is part of a market conduct examination it initiated in 2022. The department argues the data is needed to evaluate the company’s practices and ensure compliance with California insurance regulations.

The regulatory pressure follows State Farm’s May 2023 decision to stop accepting new applications for property and casualty insurance in California, citing increased catastrophe risk and rising construction costs.

Hearing set for July 10 A hearing is scheduled for July 10, 2024. If the CDI moves forward with a suspension, State Farm would be barred from writing new insurance policies in California and could face limits on renewing existing policies.

The case underscores ongoing friction between insurers and state regulators over market conditions and data transparency in California’s insurance sector.