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Oklahoma’s attorney general has launched an investigation into State Farm, following a rise in complaints that the carrier has delayed, denied or underpaid homeowners claims.
Attorney General Gentner Drummond announced Dec. 4 that he is investigating State Farm and filed a motion to intervene in a current lawsuit against the carrier. The motion alleges State Farm, Oklahoma’s largest home insurance provider, has engaged in “a coordinated program to limit roof-related insurance payouts by denying or reducing valid hail and wind claims.”
In an accompanying petition, Drummond says that while State Farm markets its policies as providing full replacement-cost coverage, claims are actually paid out according to corporate savings targets and don’t honor the policies’ promises.
“Oklahomans are paying rising homeowners insurance premiums yet receiving less protection in return, as State Farm simultaneously pursues additional rate increases while allegedly escalating its claim denials and underpayment practices,” Drummond said in the motion. “Oklahomans can weather inflation and Oklahoma storms, but they cannot withstand a system in which they are charged more while effectively insured less. Inflation and weather do not explain, let alone justify, the widening gap between what Oklahomans pay and what they receive.”
According to petitions from Oklahoma City-based law firm Whitten Burrage, which has handled nearly 200 State Farm-related cases, State Farm implemented a “Hail Focus Initiative” in 2020 that set a goal of reducing payments on wind and hail claims by 50%. Since the initiative’s implementation, dozens of policyholders have filed suit.
Drummond’s petition accuses State Farm of civil conspiracy and unjust enrichment. It also says the carrier is violating the Oklahoma Consumer Protection Act, the Oklahoma Racketeer-Influence and Corrupt Organization Act, and the Oklahoma Deceptive Trade Practices Act.
Oklahoma has some of the highest home insurance premiums in the nation, averaging around $4,000 to $6,000 annually. The national average is around $1,820 per year. Costs have climbed dramatically in recent years. Since 2019, the state has seen a 50.8% jump in premiums.
In June, Oklahoma Insurance Commissioner Glen Mulready issued a “special notice” to insurers, warning them about underpaid claims. In August, Drummond sent a letter to Mulready asking the Insurance Department to help his office combat rising homeowners insurance premiums in the state.
Mulready told a Tulsa news station that his office has already been investigating insurers’ handling of roof claims for years, but he can’t name the companies unless formal action is taken
Drummond told the same station that, even though the insurance department regulates the industry, he has now decided to step in after seeing “too many incidences of Oklahomans being injured.”
In a statement to the Tulsa station, State Farm said, “We’re committed to giving our customers all the benefits their insurance policies provide. The fact that someone files a lawsuit does not mean the allegations made are true."
Photo credit: Paul Brady Photography/Shutterstock
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