(Bloomberg) --California's insurance regulator has launched a formal investigation into State Farm's handling of claims related to January's Los Angeles wildfires, after groups of survivors complained that the process could lead to confusion and delayed payouts.
State Farm will be targeted by a market conduct examination, which will assess whether the insurer has complied with state law and whether new reforms are necessary, Insurance Commissioner Ricardo Lara said in a statement June 12. The investigation follows complaints from survivors of the Eaton and Palisades fires that the insurer's claims-handling processes could lead to delayed payments.
"No one should be left in uncertainty, forced to fight for what they are owed, or face endless delays that often lead consumers to give up," Lara said in the statement.
State Farm, which had its credit rating downgraded by S&P Global Ratings last month amid wildfire-related pressures, has been
"We're glad the commissioner is finally taking this seriously. Because, the truth is, you can't rate hike your way out of this," Sierra Kos, co-founder and co-executive director at advocacy group Extreme Weather Survivors, said in a statement. "This investigation is a win for every community that spoke out and demanded accountability."
In an emailed statement to Bloomberg News, State Farm said it is cooperating with the California Department of Insurance and that it would comply with the market conduct exam process.
State Farm received about 13,000 claims and has paid out almost $4 billion to its customers as of June 10, according to the firm.
