More California Hot Water for State Farm — LA County Investigates Claims Handling

Last January the Los Angeles area was hit with several devastating wildfires. They cost the people, and the insurers involved, somewhere between $30 billion and $40 billion in damages. One of the insurance companies covering the destruction is State Farm.

The Los Angeles Board of Supervisors isn’t too happy with how it claims State Farm has handled the claims that have been filed. It has launched an investigation. The supervisors say they’ve heard consumers complaining about delays in processing claims, the denial of claims those filing them say are legitimate and underpayments in settlements.

Embold Research’s October survey of homeowners with damages found State Farm with the unhappiest customers of all the insurers covering homes damaged by the wildfires. The research shows State Farm with higher rates of claim denials, claims estimates that are lower than they ought to be, garbled and poor communication and often using more than one adjuster to adjudicate a claim.

The board alleges these issues are potential violations of the California Unfair Competition Law. It has told State Farm if it is engaging in any unfair practices, the company must cease immediately and become compliant with California law.

Supervisor Lindsey Horvath said the survey noted an urgent need for insurers — and State Farm in particular — to resolve claims quickly.

“Los Angeles County residents have paid State Farm millions in premiums over many years, and the company has a clear obligation to honor its policies in full,” Horvath said. “Families who lost everything in the Palisades and Eaton Fires deserve fair and timely treatment — not delays, denials, or underpayments. It’s time for State Farm to live up to its commitment to be a ‘good neighbor’ and do right by its customers who have lost so much.”

State Farm responded and noted it is in compliance with California law and that it cares for the wildfire victims it insured.

“The goals of this investigation are unclear but what is clear is that it will be another distraction from our ongoing work in California to help our customers recover from this tragedy,” State Farm said in a news release. “State Farm is committed to paying customers what they’re owed. We’re handling over 13,500 claims and have paid almost $5 billion to California customers affected by the January wildfires. Nearly 200 Claims professionals are still on the ground, supported by teams nationwide, helping customers recover. We’re here every step of the way and working with elected officials to build a more sustainable insurance market in California.”

Consumer Watchdog Executive Director Carmen Balber agrees something needs to be done and said the investigation is critical to protect the victims of those wildfires.

“Many wildfire survivors have been waiting for nearly a year for help that hasn’t come,” she said. “We’ve received voluminous complaints from consumers that their insurers — including State Farm — have delayed, tried to underpay, or outright denied their claims. The County’s investigation finally gives fire victims a chance at real accountability and relief.”

Source link: Insurance Journal — https://bit.ly/4plVs6g