California’s Insurance Department has launched a formal investigation into State Farm over its handling of claims from the Los Angeles County fires.

The investigation, expected to take months, will allow for a more comprehensive regulatory review, the department said in a press release today. Insurance Commissioner Ricardo Lara said in the release that the review will help determine whether State Farm has complied with the state’s consumer-protection and claims-handling laws.

“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.

Survivors of the January fires and lawmakers who represent them had urged the commissioner to open the investigation into the state’s largest provider of property insurance.

Residents of Pasadena and Altadena have complained about delays in payments; being assigned multiple claims adjusters; having to fight to be reimbursed for smoke damage; and more. His staff will also investigate inconsistent management of similar claims and poor record-keeping, Lara said.

“I’m happy to hear the commissioner has chosen to look deeper,” said Andrew Wessels, whose Altadena home has smoke damage, high levels of lead and more. “But I’ll believe stuff when I see it on any of these things.”

Wessels, his wife and two children have lived in seven different places since the Eaton Fire. He told CalMatters today that he is waiting on at least $25,000 in reimbursements from State Farm, and has not yet bothered to submit “a bunch” more requests for reimbursement because it seems futile at this moment. Last week, the insurer assigned him a new adjuster — the fourth so far.

State Farm said it is cooperating with the investigation.

“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 Sevag Sarkissian, spokesperson for State Farm. He said the company has paid more than $3.96 billion on more than 12,000 claims by its California customers as of this week.

As part of the investigation, the insurance department is asking State Farm customers to continue to submit complaints. The department has so far received hundreds of claims related to the LA-area fires, a significant number of which are about State Farm, department spokesperson Gabriel Sanchez said today.

Formal investigations by the insurance department are known as market-conduct examinations. They have resulted in correcting insurance companies’ practices, said department spokesperson Michael Soller. After wildfires in 2015 and 2017, the department’s investigations of a handful of insurers including State Farm resulted in about $158 million more in claims recovered, Soller said.
State Farm received approval to raise the premiums of its California customers last month, and is seeking additional rate increases.

Levi Sumagaysay is a reporter with CalMatters.