Big CA insurance hike blocked for now

Against the recommendation of his staff experts, California Insurance Commissioner Ricardo Lara denied a request from State Farm to green light “emergency” rate increases for insurance policy holders.

As CalMatters’ Levi Sumagaysay explains, earlier this month the largest insurer for California homeowners sought rate increases averaging 22% for homeowners, 15% for renters and 38% for condominium owners. In a letter to Lara, Start Farm executives said the January Los Angeles County fires will be the “costliest in the history of the company,” and that rate increases will “help avert a dire situation for our customers and the insurance market” in California.

But Lara rejected the request Friday, citing that he needed more information before approving an increase, such as what the insurer is doing to improve its finances other than raising rates and whether its parent company could provide assistance. He called for an in-person “informal conference” with State Farm executives on Feb. 26 at the California Department of Insurance’s office in Oakland.

• Lara, in a letter to State Farm executives: “Customers need real answers about why they are being asked to pay more and what responsibility the company’s leadership is taking to get its financial house in order.”

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Levi also reports that as insurance claims from the deadly L.A.-area fires continue to roll in, the insurance department is publishing by-the-numbers updates. For those keeping track, the number of insurance claims for homes and businesses has risen to 33,717. Among those claims, more than 19,000 have been partially paid, totaling $6.94 billion as of Feb. 5. 

The numbers include data from individual insurance companies and the last-resort FAIR Plan, which successfully pushed for a $1 billion bailout from private insurance companies. For the first time, the insurance department also released numbers of auto claims from the fires: 5,597 claims, for a total of $73 million paid out so far.

In other economic news: As the legal battle over President Donald Trump’s freeze on certain federal funding continues to play out in courts, Levi dives into the concerns of California’s small businesses, which account for at least 29% of jobs in the state.

With $1.15 billion in loans approved for 2025, California is the biggest recipient of loans from the federal Small Business Administration. Some small business owners and advocates are skeptical of the Trump administration’s pledge that funding for small business would not be paused. If a freeze were to happen, entrepreneurs could have fewer opportunities and resources to start businesses, which could lead to fewer jobs.

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Utility bills in the state have nearly doubled within the last decade, and some reasons why Californians pay more than twice the national average include wildfire prevention efforts and baked-in profits for shareholders.

But the proliferation of artificial intelligence and its increasing demands for electricity from data centers could also have the potential to raise utility prices for consumers even more, writes CalMatters’ Khari Johnson.

AI technology requires a lot of energy: One ChatGPT query could use up the same amount of energy it does to light a lightbulb for 20 minutes, reports NPR. As the use of AI expands, more power from data centers is needed. While some lawmakers see nuclear power as a possible solution, others want to ensure that utility companies won’t leave customers financially on the hook for the energy infrastructure they build to power data centers.

One bill would require data centers and AI tech companies to publicly share how much energy they use. Another would require utility regulators to draft an electricity rate structure specifically for data centers. A third proposal would give data center operators a tax cut if they draw most of their energy from zero-emission sources.

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Though the state Legislature doesn’t usually fund research for specific rare diseases, a nearly decade-long crusade by one California lobbyist has led to a clinical trial for an extremely rare genetic disorder.

As CalMatters’ Adam Ashton explains, Joe Lang has been working in the state Capitol since the 1970s, and helps lead a lobbying firm in Sacramento. When Lang’s daughter was 10 years old, she was diagnosed with a rare neurodevelopmental disorder. The condition was later named after her, and people with Jordan’s Syndrome experience developmental delays that make it difficult to take care of themselves.

Lang pushed to bring more awareness to the disorder, and in 2018 and 2021, California set aside a total of $33 million to fund early research. And this month, Japanese drugmaker Shionogi announced it is beginning a clinical trial for people with Jordan’s Syndrome.

A former Democratic senator who advocated for the state funding said researching Jordan’s Syndrome could also help shed light on other genetic disorders.

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A law was supposed to bring transparency to the paid trips lawmakers take, but it was rarely used, a 2023 CalMatters report showed. Now the state’s Fair Political Practices Commission conducted its own audit. Find out what the watchdog agency found from CalMatters’ Alexei Koseff.