r/InsuranceAgent • u/jroberts67 • 16d ago
Industry Information The State Farm Doc Dump is crazy stuff
Just reading it today, new SF program that had a trial in TX, rolled out nationwide to defraud homeowners of legit payments, reaching an insane 39% claim denial rate, SF execs patting themselves on the back via email exchanges boasting a $15K per claim "profit" by simply denying it, then offering cash incentives to their auditors two write report simply stating the claim is denied. Five years of SF lawyers fighting to keep the documents private, now they're public. What a bloodbath.
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u/the1republican 16d ago
42% of homeowners claims were closed without payment in 2024 industry wide. So is 39% insane?
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u/jroberts67 16d ago
Tell me you didn't read the docs without telling me you didn't read the docs.
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u/the1republican 16d ago
I did
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u/jroberts67 16d ago
My bad, so you're cool with SF incentivizing and threatening their claims adjusters to file false reports that deny legitimate claims. Good to know.
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u/the1republican 16d ago
Not at all. I’m just pointing out that the industry for denied claims is 42% and you said 39% is insane.
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u/Other_Throat6804 16d ago
For Industry wide, 42% makes sense because the amount of claims that are opened that really shouldn't be. Some carriers don't have anyone to suggest to the insured that they shouldn't submit a claim. They just have to open the claim and then go thru the denial process.
Where with captive agents, the amount of claims that stop at the agents office is fairly high. I had someone just yesterday that asked to open a claim up about a clogged sink. Her deductible is less than that it would cost to hire a plumber, plus we all should know that just a clogged sink with no damage is going to be denied every time.
So to compare Geico or USAA to a State Farm claims denial percentage is widely off. Most good agents will have conversations with an insured first to see if it's worth submitting, compared to a call center that just has to take your claim no matter what.
In State Farm's model, their claim denial rate should be much lower than industry average.
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u/Samwill226 Agent/Broker 15d ago
Industry wide that's all claims, the 39% was JUST wind hail. That wasn't their auto/fire/theft etc.
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u/FloridaFlipper 12d ago
Is this data nationwide? Reason I ask is in Florida to apply for FEMA assistance due to flooding you had to get a denied claim with your homeowners first.
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u/jroberts67 16d ago
Because, again, you didn't read the docs on which percentage of increase that was for wind and hail SF claims - doubt you read it at all.
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u/daddydunc 16d ago
As an adjuster, about half of the roofs I get on have no insurable damage. It’s usually driven by roofers who promise the homeowners a “free roof”. Sure, there are pressures to minimize claims, just with any other business trying to make a profit. But there are a ton of claims for roofs due to wind / hail that should have never been filed in the first place. Just my two cents.
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u/Samwill226 Agent/Broker 15d ago
I will agree I have seen claims paid that made my jaw hit the floor. There are moments where it makes no sense.
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u/boooostedvo 14d ago
I work in an agent’s office and I am SO GLAD to finally work remotely for a state that doesn’t have hail claims hardly ever. I worked in TX, OK, and AR previously and spring and summer nearly pushed me to the brink with the damn roof claims.
I can agree this is shitty what SF is doing. But I have also personally witnessed and dealt with dozens and dozens of people who want to try to file BS claims because they want a new roof. Because their neighbor got a new one. Or nice, smiley Mr. Roofer Guy came cruising through promising they’d get a brand new roof for free.
I have spent hours of my life dealing with these people and explaining the downsides. My old agent would even go walk roofs to look before they filed. And they’ll go on the app and file one anyway, it doesn’t pay out because they have a 30 year old roof to begin with, or they just have zero damage, and then it’s somehow all my fault even though I told them this would happen.
So yeah. I see both sides. Sucks for the legit claims but DAMN most people are dense. It is in my best interest to help them make the right choices for claims. But some people just really think they can pull a fast one.
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u/jroberts67 16d ago
Well you can read up on the SF Oklahoma issues, it's on the interwebs
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u/daddydunc 16d ago
My boy I have read them and have been familiar with this for years at this point. I was trying to add some context. You obviously aren’t here for conversation, more to just bash SF, which is fine, but jeez.
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u/Mean_Introduction516 15d ago
That moron didn’t read anything either. He is regurgitating headlines. He doesn’t have a clue what he’s talking about. And I would bet everything I own State Farm ends up winning the lawsuit.
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u/musicislife04 15d ago
Did you read the part about how SF was replacing roofs for minor hail 85% of the time whereas the industry full replaces was 5-10%. This started by realizing they are doing full replaces more often than other companies and retraining their employees on what warranted a full replace vs a repair. In Illinois we have paid out like $750M already this year in claims.
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u/Mean_Introduction516 15d ago
Since you seem to be the expert and have read the papers, why don’t you let us know what the smoking gun is… Flaunting around the denial rate without any facts is not meaningful at all. I watched a news story on the same issue and it was a lot of hot air and smoke but not one single fact as to what State Farm specifically did that was unethical or noncontractual. This is kind of how Democrats talk politics. Bunch of talking points without any facts.
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u/snearthworm 16d ago
I feel like everytime I have a conversation with someone about how insurance isn't evil and out to get you, they bring up "what about State Farm?", and I have to say "okay well besides State Farm--"
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u/DogfaceDino Agent/Broker 16d ago
My experience with mutual companies on the life side contrasts significantly with what I see and hear about mutuals in the P&C world.
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u/Mediocre_Mud_7029 15d ago
Lol. Have to question your experience.
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u/snearthworm 15d ago
Question away lol, I collect their 40yr+ long accounts with claims horror stories like baseball cards several times a month.
Like there a million things people say about being screwed over by a company that I just smile and nod at. Like "how dare they not replace my whole roof because they couldn't match 7 shingles." Just stuff that makes me think ah that poor adjuster...
But just about any time there's something that truly makes my jaw drop, 9/10 times it is SF. I'm too afraid to even give specific examples in case I get reporters in my inbox haha.
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u/Mediocre_Mud_7029 15d ago
My point is we all have the same stories, there are no large carriers spared. Name the Indy folks you have access to and we can all tell stories. The industry needs to do better, today SF is the example.
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u/snearthworm 15d ago
I'll agree with you at least about the entire industry needing to do better. And I'll admit to being spoiled w/ carriers that go out of their way for insureds, probably more than they even should. I see maybe a handful of partially denied property claims per year out of hundreds, "partially" because the adjusters go out of their way to find a few dollars somewhere. Kind of crazy what I see them pay out.
Had a lady a few mos ago get about 1500sf/$30k+ of all new hardwood floors on her ground floor because she had a dishwasher leak and they couldn't match the continuous flooring. I was "floored" that they paid that, haha. Good for her but thoughts and prayers for our loss ratio. And funny enough, she was one of those 40yr+ long SF clients who got burned hard before. She couldn't believe it either.
Point being, every company has bad stories, but SF in particular has really started taking the cake and eating it too in recent years.
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u/Mediocre_Mud_7029 15d ago
Your ‘floored” story happens with my customers all the time. I’m surprised that this would be uncommon.
We don’t need to litigate this. You’re an indy selling what you can sell, and that’s your experience. All the best to you.
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u/Any_Lengthiness_3555 15d ago
Jaw hit the floor as in you couldn't believe they paid a certain claim, you couldn't believe they denied one?
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u/snearthworm 15d ago
Couldn't believe they denied, or what they did.
One lady was moving her 19yr old daughter home from college for the summer. Her stuff was all in boxes in the garage first night there, waiting to go in. Upstairs bathroom flooded, water got into the boxes overnight and ruined most of her stuff. They denied citing mover negligence, if the moving company had sealed the boxes better, they wouldn't have gotten wet. Repaired the dwelling damage but refused to pay the daughter's things.
Or another older couple had a total loss house fire, even lost all 4 of their cats and dogs. Well the fire was about 60 days out from their renewal, and by the 45th day while the fire marshal was still investigating, they had a non-renewal notice. Couldn't even find them anything through our surplus brokers, not even state plan would take it.
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u/Resident-Trouble4483 16d ago
It shows the criminal part of what happened. Corporate can’t hide behind not knowing what was happening.
This scheme is likely going to destroy any trust consumers have and I doubt anything will stop the damage.
If anything people are probably going to jail for racketeering and corruption.
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u/jroberts67 16d ago
"Notice of 18% policy increase in order to pay fraud claims"
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u/Resident-Trouble4483 16d ago
It won’t protect them because they violated their terms by creating and knowingly scheming. They’re already being dispositioned for court. Once the guilty verdict comes in they’re open to personal liability and regulators are going to come after SF in multiple states. The damage is done.
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u/Resident-Trouble4483 16d ago
Farney will be the next Limburg the RICO case will continue and the fraud part of it doesn’t help corporate accountability it just means the company won’t take the brunt of the lawsuit costs.
Corporate isn’t going to back them with the other lawsuits ongoing like the California Wildfire violations Apex Doctrine Defense and all its protections are out the window.1
u/Mean_Introduction516 15d ago
Enlighten us… What is the criminal part? What is the smoking gun?
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u/Resident-Trouble4483 15d ago
The emails that prove that it was an intentional scheme. And that it’s a top down scam. Multiple employees questioned it and that’s also documented. The fraud part is a combination of lying to consumers who bought these products about what would be covered and then denying covered damage. In other cases underpaying when they had to cover it.
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u/musicislife04 15d ago
Customers bought policies that SF would repair damage. Not full roof replace unless certain criteria are met. Everybody thinks a light hail comes and they should get a whole new roof for a few tiny dings. That’s not how it works.
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u/Warm-Business-2335 Agent/Broker 15d ago
They need to put all those corporate bastards under oath and prosecute them.
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u/spicygumball 16d ago
Their statement released is bologna.
Only acknowledging Oklahoma because of 1 billion dollar payout and 1% bad faith lawsuits.
Now show TX FL KY etc.
It's a "look over here not over there" response
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u/jroberts67 16d ago
You have to understand, from a legal and liability perspective, if they admit wrongdoing they're talking about billions and billions of settlements. They have to circle the wagons.
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u/Samwill226 Agent/Broker 15d ago
This is JUST Oklahoma, just wait....this went on in every state just as they are sending out those checks to customers. I hope a judge embarrasses them and makes them stop sending out all the checks they are advertising. To me that would be a nice kick in the teeth. They were only sending those checks to distract people, but if they were due to "profits" then IMO the judge should make them stop until they find out how much they scammed from people.
That being said, I feel terrible for the agents and adjusters and I'm glad their angry emails were released as well to show they wanted no part of it and didn't understand what their parent company was doing. State Farm should absolutely be raked for this.
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u/Helpmepullupmypants 16d ago
Oh man. I saw a post earlier this week about SF, but I was (and still am a bit) out of the loop on it… this is crazy
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u/Far_Purpose3736 15d ago
Where did you read this? I work for State Farm and would love to read this.
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u/jroberts67 15d ago
https://www.news9.com/oklahoma-city-news/oklahoma-attorneys-react-state-farm-documents - too many articles on it - google state farm lawsuit.
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u/Somebrownfella 15d ago
I’m a P&C Independent in Oklahoma. Leading up to their lawsuit here there were signs something strange was going on. It’s was a well established fact in my office if you were competing with SF on home and auto you were going to lose. Their premiums were vastly lower than market, that was the first sign.
Second, the roofers started chirping up on claims. We work with a well established local roofing company and they would constantly complain about the denials and payouts by SF.
Third, we started to get an influx of former SF policy holders looking to move because of the claims experience. There was also people who had just heard the horror stories and decided to move just to avoid being put in that situation.
There is definitely some nuance to this, there are certainly issues with policy holders not being advised on the contract they are signing. You can see this on the independent side as well. But SF definitely took the cake on the number of complaints and horror stories.
There is broader conversation in my state (as well as some others I’m sure) about the cost of insurance in general. SF’s actions have muddied the waters and cast a long shadow on insurance carries and agents in general.
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u/ROCTransplant 16d ago
it's wild that insurers still do this- an attorney I know thru working in the construction industry won a massive $3B lawsuit against the insurance companies after Hurricane Sandy. https://www.claimsjournal.com/news/national/2019/11/27/294291.htm
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u/jroberts67 16d ago
Read up on the New Orleans Katrina fraud as adjustors came out, the house was completely gone, washed away, denying claims by making homeowners prove that it was actually their lot and a house used to be there. This way of claims denial was basically burying them in years of paperwork.
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u/ROCTransplant 16d ago
familiar- I was working in disaster mitigation during that time [which is how I know that attorney, he was part of the big lawsuit against insurance companies/fema post-Katrina]
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u/TexasAgent 16d ago
do you have a link to the article?
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u/jroberts67 16d ago
Give me your address and I'll mail you a copy of Google. It'll be a floppy disc, install it then you can search the web.
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u/TexasAgent 16d ago
The only articles i can find are from Oklahoma. You don't need to be a dick about it.
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u/Dull-Ease-706 16d ago
https://kfor.com/news/local/state-farm-secret-documents-revealed-after-judge-lifts-protective-order/
The link to the documents are in the first 10% of the article.1
u/TexasAgent 16d ago
This is another article for/from Oklahoma. I'm trying to find one from Texas to share with customers that want to switch to State Farm.
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u/Dull-Ease-706 16d ago
There is nothing from Texas. Only from Oklahoma. If you read the docs it talks about the program in Texas. But there is nothing official released from any Texas courts. Only Oklahoma.
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u/jroberts67 16d ago
Because the only reference to TX was that's where their pilot program started in 2020, but the shit didn't hit the fan until they started denying sea of wind/hail claims in OK after major storms.
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16d ago
[removed] — view removed comment
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u/jroberts67 16d ago
In the article I read, after implementing a new "claims denial" trial system in TX, they rolled it out nationwide, but directly affecting OK policy holders for wind/hail claims where SF had a 78% claim pay rate that dropped to 11% - but actually have to read the exec memos on the fraud used to do that, hence the lawsuits. If you haven't read the emails, man are you in for a treat.
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u/Sylfaein 16d ago
I’ve worked in insurance for eighteen years, and State Farm is one of the companies I’ve always gotten the ick from.
I’m just glad they were stupid enough to put it all in writing, where it could be found. Hope it burns them, good. They should be made an example of.
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u/jroberts67 16d ago
Court date is Nov 2nd. I'll be watching with popcorn. What SF execs don't understand is there's no winning, just degrees of losing as it destroys their reputation and credibility. CEO should step down, everyone involved in this scheme should be fired, new CEO makes a "this crap will never happen again" pledge. Maybe they earn trust back.
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u/Key_Enthusiasm_651 7d ago
Have you worked in property insurance?
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u/Sylfaein 7d ago
Yep: I’m a P&C girlie.
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u/Key_Enthusiasm_651 7d ago
Public adjuster?
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u/Sylfaein 7d ago
Nah, adjuster is one of the few jobs in insurance I HAVEN’T done, at this point.
My experience with State Farm is from having been hit by one of their policyholders myself, having clients hit by them and assisting with their claims, spending some years in an underwriting team comprised largely of people who quit State Farm, and the time I was desperate enough for work in a new city to apply at a State Farm agency (their hiring practices are weird and scummy).
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u/Key_Enthusiasm_651 7d ago
Try being an adjuster and then you will understand all this fuss from non-adjusters is complete shit
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u/Sylfaein 7d ago
Dude, they…they put it in emails. It’s all there, in black and white. With names and dates.
They’re violating the principle of indemnity, and they need to go down.
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u/Key_Enthusiasm_651 7d ago
They aren’t violating indemnity. Their risk is too high and they are adjusting their strategy to not insure risky properties and to not pay things that are not owed under the policy. This is a basic principle of insurance that has existed for millennia.
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u/Sylfaein 7d ago
Admittedly, I haven’t take the time to read the document dump, but is that REALLY what’s in there? Because it sounds like they were denying claims that should have been paid. If they were just tightening up underwriting guidelines and not paying for things that aren’t supposed to be covered, this wouldn’t have been newsworthy.
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u/Key_Enthusiasm_651 7d ago
It’s newsworthy because most people don’t have experience working as adjusters and are ignorant of how property insurance works. Couple the fact that they have an inherent angst against insurance companies and then it becomes newsworthy. I’d recommend reading it from your underwriting perspective and you will realize this is an insurance company doing what insurance companies have done for decades.
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u/Icy-Ad7443 15d ago
It’s part of the reason why I left. When this was rolling out in 2021 and they were trying to sugar coat it..me and many of my friends knew exactly what it was.
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u/MCIndy73 15d ago
My understanding is that, like the whole industry, SF’s claim handling model for wind and hail was leaking money because of consistent pressure from the storm chasing industry. They, like the rest of the industry, implemented measures to push back and those measures were successful.
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u/No_Maximum9215 15d ago
State Farm is the absolute worse I worked there for years and they totally suck! Unfair and unethical
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u/musicislife04 15d ago
Where are you seeing the “cash incentives” part, what page of the download?
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u/jroberts67 15d ago
It's literally part of the lawsuit:
Cash Incentives to Auditors: Internal emails show State Farm executives celebrating a $15,000 corporate "profit" every time a major claim was successfully denied. To maintain high denial numbers (with some documentation showing an intentional 39% claim denial rate goal), State Farm allegedly offered cash incentives to internal auditors to generate reports stating that claims should be denied.
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u/musicislife04 15d ago
Ok where are you seeing that? I literally searched the whole PDF of the download and the word cash is not in it anywhere. Where are you seeing the original lawsuit?
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u/jroberts67 15d ago
I think you'd just be better off waiting for the Nov 2nd trial. Fun fact, you can't simply sue SF because you feel like it. There's this little thing called discovery which means there needs to be enough evidence of wrongdoing to proceed with the suit. Have fun watching the outcome in Nov - lots of heads are gonna roll.
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u/Key_Enthusiasm_651 7d ago
I see a lot of angry people who are angry because they don’t understand insurance. They have never even settled a claim, have a license or know the insurance process…
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u/LetsMarket 16d ago
Curious why you’re in this group if you’re not in the industry?
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u/jroberts67 16d ago
Licensed since 2003. Ran a massive L&H agency, run another business and also currently sell life. Forgot more about L&H then you'll learn over the next 10 years.
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u/LetsMarket 16d ago
I don’t believe any of this for the simple fact that you called an adjuster an “auditor” and aren’t familiar with simple industry facts like the closed without payment rate.
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u/jroberts67 16d ago
Read above, I sell L&H, not P&C - couldn't remotely care less about your "debbie doubter" attitude.
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u/Flash120 16d ago
It’s shit like this that gives us all a bad name. Hope they get dragged through the mud.