The Travis County DA’s office has launched a criminal investigation of State Farm, the massive insurer, regarding its handling of thousands of insurance claims following Hurricane Ike. Now, Senator Rodney Ellis is demanding that the Texas Department of Insurance (“TDI”) reopen its investigation of State Farm and its Texas subsidiary, State Farm Lloyds. “Given that law enforcement is now investigating State Farm for the exact same concerns I raised with you eleven months ago, this problem can no longer be ignored,” wrote Senator Ellis in a letter to TDI’s Commissioner, Eleanor Kitzman. Kitzman responded by drafting a public letter to the Texas Legislature. “Given the severity of the accusations made by the District Attorney, TDI is carefully considering its options for further regulatory action in this matter,” wrote Kitzman.
ABC News is reporting that the Travis County DA’s office started its investigation after examining documents regarding State Farm’s alleged cover-up of the denials of Texas consumer insurance claims for home damage caused by Hurricane Ike. Specifically, State Farm is alleged to have intentionally denied thousands of homeowners’ claims for roof damage by denying that lifted shingles were caused by Hurricane Ike or that any repair was needed. This was not a case by case basis; but rather, a management decision from the top down and applied across the board to all claims. If this is true, it amounts to company-wide, intentional violations of the Texas Insurance Code and a cover-up.
State Farm is the nation’s largest insurer and is estimated to insure one in six homes in Texas. The latest allegations are that State Farm may have falsified information provided to state regulators with regards to how its subsidiary, State Farm Lloyds, responded to homeowners’ claims for lifted shingles caused by Hurricane Ike. While State Farm advertises that it is “like a good neighbor,” it appears that State Farm is not the neighbor you want if you live anywhere near the gulf coast.