Farmers Insurance Group of Cos. recently applied for a 6.9 percent premium increase for homeowners insurance in the state of California.
According to the Los Angeles Times Mary Flynn, a spokesperson for Farmers, the request was due to rising costs from water-damage claims, which have been attributed to aging pipes in homes built in the 1960s and 1970s. She stated that despite the decrease in water-related claims, the severity of the claims has increased.
According to Nanci Kramer, a spokesperson for the California Department of Insurance (CDI), Farmers’ earlier rate hikes were due to an increase in costs for the insurer, as well as relatively low rates, which were well below its competition. Kramer claimed that the recent request will be carefully reviewed by the CDI.
This is Farmers’ fifth request for a rate increase in the past two years, including a 6.6 percent increase in 2000, as well as two 6.9 percent increases and one 5 percent in 2001. This newest rate hike would increase homeowners’ policies at an average 37 percent more than they were in January 2000.
Any request for a rate increase under 7 percent is typically approved by the CDI, and does not require a public hearing.
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