State Farm Faces Criminal Probe Regarding Roof Claim Handling
Posted on September 10th, 2012
State Farm advertises extensively to promote an image of providing “Good Neighbor” service. Since many insurance companies have a less than sterling reputation, this marketing strategy is important. So, when ABC News has a headline that reads, , you can bet executives at State Farm’s home office are asking its claims department, “what the heck is going on?”
The news report is fairly straight forward:
State Farm Insurance, the nation’s largest home insurer, faces a new criminal investigation in Texas related to how it handled potentially tens of thousands of hurricane claims there, ABC News has learned exclusively.
Gregg Cox, who leads the public integrity unit of the Travis County District Attorney’s office in Austin, confirmed to ABC News his investigators recently launched the probe after reviewing newly released communications from top State Farm managers in Texas. Some of the same communications have led to lawsuits by customers who say they were defrauded by State Farm Lloyds, the Texas subsidiary of the larger insurance company.
The documents in question relate to an alleged cover-up by State Farm management related to its denial of consumer insurance claims for a common type of roof damage that occurs during high wind events and hurricanes.
What is the common issue? It is the damage that occurs when roof shingles rise during a windstorm. As noted in , and , TWIA executives got in trouble with the same issue.
A recurrent problem I find is that insurers spend a lot more time trying to come up with justifications for why damage is not covered rather than conducting thorough and fair investigations. I wrote about this problem with roof claims in . The post is a refresher on roof damage investigation from the standpoint of the insurer and noted:
It looks to me as if this criminal probe may address the problem with State Farm.
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Tags: Farm, State Farm
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