California Insurance Commissioner Ricardo Lara launched an official investigation into State Farm for abusive practices against policyholders in the wake of the Palisades Fire and the Eaton Fire in January.
As Breitbart News has reported, State Farm dropped many of its customers in fire-prone zones in the months — even days — before the fires, acting partly in response to California’s refusal, at the time, to let insurance companies raise premiums in response to growing future risks.
Yet many policyholders who were lucky enough to retain their policies found that State Farm was indifferent at best and abusive at worst when it came to fulfilling its obligations to help them rebuild.
Policyholders whose homes burnt down completely complained of being forced to itemize every single lost possession to receive 100% of their coverage for destroyed property. Many also received lowball offers of compensation from the company, apparently designed to encourage cash-strapped residents to settle for less than they were entitled to receive. And State Farm became notorious for reassigning insurance adjusters, meaning that policyholders often had to work with three or four, starting over with each new adjuster assigned to them.
Critics said that State Farm was trying to spread its losses out over multiple quarters. Local resident Joy Chen of Altadena, who organized protests against the company, alleged that adjusters’ initial estimates of damage were being revised downward by the company’s head office as part of a deliberate strategy.
Lara, who approved State Farm’s recent request for a 17% rate increase, and who appeared lethargic in response to desperate requests for action from policyholders, finally took action Thursday.
The New York Times reported:
The so-called “market conduct examination” is a tool used when there is evidence of broad consumer complaints, according to a spokesman for the department. It’s the fourth time that State Farm General Insurance Company — the state’s largest insurer, which covers one out of every five homes in California — has been the subject of such an investigation since 2014, said Michael Soller, a deputy insurance commissioner.
“Some troubling patterns that my staff will investigate include the frequent reassignment of multiple adjusters with little continuity in communication, inconsistent management of similar claims, and inadequate record-keeping,” Mr. Lara said in a statement. “These issues create unnecessary stress, prolong recovery, and erode trust.”
Lara’s action came after a Senate committee hearing last month at which Sen. Josh Hawley (R-MO) accused executives from State Farm and AllState of abusing their customers in disaster areas nationwide.
President Donald Trump’s special envoy, Ric Grenell, has also been active in pressuring the company, most recently pushing it to compromise on the issue of itemization, allowing clients to receive 65% of the value of the lost contents of their homes without having to prepare a detailed list.
Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of Trump 2.0: The Most Dramatic ‘First 100 Days’ in Presidential History, available for Amazon Kindle. He is also the author of The Trumpian Virtues: The Lessons and Legacy of Donald Trump’s Presidency, now available on Audible. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.
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