State Farm is under investigation in California over how the insurer processed claims related to wildfires in the Los Angeles area earlier this year.
California's insurance commissioner Ricardo Lara says the investigation will determine whether State Farm has complied with that state's consumer protection and claims-handling laws following the Palisades and Eaton wildfires.
Lara says State Farm and other insurers have inconsistently handled smoke-damage claims and that has led to confusion and delays for homeowners.
"Some troubling patterns that my staff will investigate include the frequent reassignment of multiple adjusters with little continuity in communication, inconsistent management of similar claims, and inadequate record-keeping or information-sharing among claims teams. These issues create unnecessary stress, prolong recovery, and erode trust," said Lara in a news release.
Lara said the investigation will determine whether additional insurance reforms are needed “as natural disasters increasingly disrupt insurance markets across the country."
A State Farm spokesperson the insurer is complying with the California Department of Insurance and has paid more than $3.96 billion to its California policyholders based on nearly 13,000 claims as of this week.
“A fair review will find that thousands of State Farm customers are being helped by our teams on the ground in Los Angeles County and are very satisfied,” said State Farm spokesperson Sevag Sarkissian. "Our claims force is the largest in the industry and we have brought the full scale and force of our catastrophe response teams to help our Southern California customers recover."
The investigation comes after California regulators approved State Farm’s request to raise premiums on an emergency interim basis, according to the news site CalMatters. State Farm said the wildfires put the insurer in financial distress as it expected to pay $7 billion in claims related to the fires.
State Farm is based in Bloomington. It is McLean County's largest employer.