Two California senators have called for an investigation into the state insurance department’s handling of claims filed by victims of the Los Angeles wildfires who are struggling to collect payments from State Farm.
The calls follow a Los Angeles Times report on Thursday that revealed dozens of complaints among more than a dozen fire victims about the way the state’s insurance department has handled their claims since the January wildfires.
The Times also reported that a federal compliance officer who cited State Farm for multiple violations could be punished with a 10% pay cut after a State Farm executive complained that his criticism of the insurance policy was “criminal.”
The investigation is being sought by lawmakers from two jurisdictions: Sens. Ben Allen (D-Pacific Palisades) and Sasha Renée Pérez (D-Alhambra).
“These are shocking allegations,” Allen said. “We think we have to do something with this information. What form it will take is not yet clear.”
Their request, made orally on the Senate floor Thursday, is now before newly appointed Senate Insurance Committee Chairman Steve Padilla (D-San Diego), who has a background in consumer affairs but has also worked with the state insurance commissioner on the insurance reform bill.
He may request an information hearing, or an official Senate investigation with subpoena power.
Padilla’s office said the senator had not received a “legal request,” but legal tools to address how insurers handle claims are being considered. “We will continue to gather facts to determine next steps,” his office said in an emailed response.
Pérez also questioned the nature of the market conduct investigation that was launched in June — at his request and that of other lawmakers — into State Farm’s claims processes, and his concerns about how policyholder complaints are handled.
“I need to make sure that they take the investigation into the delay in the applications and oppose it,” he said on Friday.
Consumer advocates welcomed the proposed investigation.
“California has some of the best consumer protection laws in the nation … that we need now to be implemented,” said Joy Chen, director of the Eaton Fire Survivors Network.
If approved, the investigation could be a rare and important examination of the insurance department and how it has handled consumer complaints against State Farm and other insurers accused of denying and delaying wildfire claims.
A spokesperson for State Farm declined to address complaints from victims of the LA fire.
Allen said he believes the insurance department has helped hundreds of policyholders settle lawsuits. “This should not take away from that hard work,” he said. “I don’t think anyone should believe that they were sitting around doing nothing to people.”
But, he added, staff members of both lawmakers have gone to beat people seeking help from the insurance department. “You shouldn’t do that,” Allen said.
“We want to see a department that is responsive. We want to see a department that represents consumers,” Allen said.
Allen and Pérez also said they want a full explanation about the conduct of the 32-year veteran of the agency who challenged State Farm over its handling of wildfire claims.
The Senate had previously held hearings on the information shortly after Jan. 7. 2025, wildfires focused on the state of the insurance market in California.
The storm devastated Pacific Palisades and Altadena, killing 31 people, destroying more than 16,000 buildings and contaminating others with toxins and heavy metals.
A study by the non-profit Department of Angels released in January showed that 70% of fire survivors were left unable to return home and nearly half lost their money. In other surveys, the Angels Department identified insurance problems, often with State Farm, as the root cause.
Fire survivors shared accounts with the Times of early closure complaint files and letters and emails from the government asking them to stop trying to contact their state compliance officials.
The insurance department insists that policyholder complaints are confidential, even to those who file a complaint. Compliance officers are not allowed to tell consumers about violations, even when they see them. Instead, the 34-person team will guide insurance companies in complying with the law, and if that fails, can flag violations for follow-up by the ministry’s legal office or market conduct unit.
Personnel files show that compliance officer Coleen Vandepas was disciplined for using words like “reckless” and “shameful” for accusing State Farm of violating the law. During his appeal hearing, his attorney said, the state described the law enforcement officer’s job as “regulatory diplomacy.”
Insurance Commissioner Ricardo Lara first hinted at a possible market investigation into State Farm’s claims practices in April during a 90-minute forum with wildfire victims. The test was announced in June. Los Angeles County in November opened its own investigation into State Farm’s claims handling. No investigation results have been released.
In the meantime, Lara’s department continues to encourage policy holders to lodge insurance complaints with his agency.
Spokesman Michael Soller said “about 2,000” consumer complaints have been filed related to the LA wildfires, and he said the department’s complaints division has recovered $210 million that policyholders may not have received.
“We are investigating State Farm’s conduct after the Southern California wildfires to get to the bottom of complaints that they unreasonably delayed or denied survivors’ claims,” he wrote to the Times. “We intend to use all available tools to hold the company accountable.”
Eaton resident Ani Orinakyan, who has been fighting State Farm to get heavy metal test results for her smoke-damaged home, was recently told the insurance company will finish paying her living expenses in two weeks.
His complaint to the insurance department, which he filed three months ago, led him to write a letter acknowledging that he had received it. “Our only choice is to return to the toxic house and put our health and lives at risk,” he said. “It is not right that we are facing homelessness.”
Lara rejected requests by policyholder attorneys to delay approval of State Farm’s pending rate hikes until the company’s application processes are addressed. He approved an emergency 17% increase in homeowner premiums that went into effect in June, and a settlement agreement for a full 30% increase in premiums is expected before the end of the month.
“State Farm used the LA fires and the threat of future fires to push the urgency of the $1.3-billion price increase,” said Consumer Watchdog Executive Director Carmen Balber.
