California's top insurance regulator says he will approve an emergency request from State Farm to raise home insurance rates for roughly a million customers if the company can justify the hike at a public hearing.

California regulators have given State Farm General initial approval for a major home insurance rate hike later this year — but first, they want the insurer to pledge not to drop any more customers en masse.

It grew into the state’s largest home insurer by writing policies with low premiums and inadequate reserves for the risks it was underwriting.

In essence, to operate as a regulated carrier in California, a private insurer is exposing itself to unknown and uncapped losses for risks it never knowingly assumed. This is, literally, like being sent a bill for your neighbor’s house when it burns down and yours is still standing.

State Farm executives said at the meeting that it needs a 22% emergency rate hike in California to cover more than $7.9 billion in losses. Lara initially rejected the request, saying in a Friday, Feb. 14, letter to State Farm executives that he needed more information before he can approve an increase.