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State Farm was cooking the books and regulators wanted to
Posted on: January 11, 2025 at 11:34:40 CT
TigerMatt STL
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State Farm buys reinsurance from… State Farm. The subsidiary in California was buying reinsurance way in excess of what they were getting reimbursed from the HQ, and claiming that reinsurance costs were going up so they needed to raise premiums. The California regulators asked to see the books.
Over the previous 10 years, the State Farm subsidiary in California bought $2.2 billion in home owners reinsurance from State Farm HQ. The payouts from State Farm HQ to the State Farm subsidiary were $400 million. That’s $1.8 billion shifted from the subsidiary to the HQ. The subsidiary then claims that $1.8 billion as an expense. They need to raise rates to cover this expense.
California called BS on it.
State Farm buys reinsurance from… State Farm. The subsidiary in California was buying reinsurance way in excess of what they were getting reimbursed from the HQ, and claiming that reinsurance costs were going up so they needed to raise premiums. The California regulators asked to see the books.
Over the previous 10 years, the State Farm subsidiary in California bought $2.2 billion in home owners reinsurance from State Farm HQ. The payouts from State Farm HQ to the State Farm subsidiary were $400 million. That’s $1.8 billion shifted from the subsidiary to the HQ. The subsidiary then claims that $1.8 billion as an expense. They need to raise rates to cover this expense.
California called BS on it.
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State Farm was cooking the books and regulators wanted to - TigerMatt KC - 1/11 11:34:40
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