California's third-largest home insurer is seeking a 6.9 percent increase in its homeowner policy premiums under a recent regulatory reform that lets companies charge more in exchange for continuing to cover wildfire-prone areas.

Mercury Insurance submitted its request for a rate hike on Friday, saying in a press release that higher premiums "will strengthen the company's ability to offer coverage to Californians in distressed areas prone to wildfires, many of which are currently limited to the high-cost, limited-coverage California FAIR Plan, which has historically been the insurance plan of last resort provided for homeowners living in these areas."

The insurer is the first to request a rate hike based on the state's recently introduced Sustainable Insurance Strategy (SIS), which allow

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