A judge in Comanche County, Oklahoma, recently de-designated 31 State Farm documents that had been concealed under a protective order, allegedly revealing proof the insurance company was employing a scheme that produced a profit of $1.4 billion by underpaying and denying wind and hail claims, according to KFOR.
The documents include emails between company executives discussing the profits obtained from the program.
“They did a pilot in Dallas County, and it worked,” said Reggie Whitten, co-founder of Whitten Burrage law firm, which represented State Farm policyholders in the lawsuits. “They rolled it out in the whole state of Texas, and then they rolled it out in the country, which included Oklahoma. In the very first year, they lowered indemnity payments to insureds $1.4 billion.”
Emails in the documents also say State Farm saved more than $15,000 per denied or underpaid claim.
“Every homeowner like the Wests that we represent or like Billy Hursh, every time State Farm does not pay for a total roof replacement they’ve identified, they save roughly $15k per homeowner or an average of $78.8 million,” said Hannah Whitten, an attorney with Whitten Burrage. Attorneys say the alleged scheme used tactics such as employees being “incentivized to deny claims.”
The documents also include an email from a Kentucky State Farm agent who wrote to company leadership about how the company was handling roof claims: “The old slogan of ‘we pay what we owe, not a penny less, not a penny more’ is not the case right now. We now pay really low, and customers fight to get what we owe them in more and more cases.”
State Farm responded to the released documents in a statement, which said: “State Farm is committed to meeting the needs of our policyholders in Oklahoma and we’re proud of our team’s work to help communities recover after disaster strikes. Over the past two years alone, State Farm has paid more than $1 billion to Oklahoma customers for wind and hail damage to their homes and property. By contrast, the number of bad faith lawsuits currently pending in Oklahoma is approximately 1% of the approximately 30,000 residential and commercial claims presented by State Farm policyholders that the company has responded to over the past five years.”
Glen Mulready, the state insurance commissioner, said in a statement that the Oklahoma Insurance Department “has been conducting an independent investigation into insurance industry practices for the past several years, including practices involving the adjustment and payment of homeowners’ claims following severe wind and hail events,” and the department is aware of the recent developments regarding the State Farm documents and is reviewing the materials.
