California regulator to approve State Farm's 22% home insurance rate hike, but with a catch

California's top insurance regulator on Friday said he would approve an emergency request by State Farm to raise premiums 22% on home insurance for about a million customers if the insurance giant could justify the hike at a public hearing.

State Farm, the state's largest insurer with roughly 1 million home insurance policies in California, said the emergency rate would help the company rebuild its capital following the Los Angeles wildfires that destroyed more than 16,000 buildings, mostly homes. The company is trying to prevent a "dire" financial situation that executives said could push homeowners into the state's last-resort insurance option.

California Insurance Commissioner Ricardo Lara said that other California insurers won't be able to absorb State Farm's customers if the insurance giant stops doing business in California, but that he wanted more data on how the company manages its finances and calculates risks. He asked the company to present its argument publicly on April 8 to a judge, who will then give a proposed decision. Lara will then make a final decision.

"State Farm claims it is committed to its California customers and aims to restore financial stability. I expect both State Farm and its parent company to meet their responsibilities and not shift the burden entirely onto their customers," Lara said in a statement. "The facts will be revealed in an open, transparent hearing."