State Farm Case Could Have Wider Impact

An ongoing class-action lawsuit against State Farm Insurance Companies–with plaintiffs seeking to force the insurer to give out billions of dollars of what they describe as "excess surplus" to class-action suit members–could have serious implications for other mutual companies, according to industry participants.

Late last month, State Farm, the nations largest auto and home insurer, filed an appeal to reverse a lower-court ruling on its case, Hill, et al. v. State Farm. In this suit, originally filed in a California state court in 1999, plaintiffs claimed the Bloomington, Ill.-based insurer had amassed surplus beyond a "reasonably and prudently" necessary level. They have been trying to force the insurer to hand over up to $47 billion to a class-action members group, made up of some 50 million present and past State Farm policyholders.

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