Entries in Insurance (5)


State Farm Faces Criminal Investigation over Hurricane Claims

Tim Boyle/Getty Images(NEW YORK) -- State Farm Insurance, the nation's largest home insurer, faces a new criminal investigation in Texas related to how it handled potentially tens of thousands of hurricane claims there, ABC News has learned exclusively.

Gregg Cox, who leads the public integrity unit of the Travis County District Attorney's office in Austin, confirmed to ABC News that his investigators recently launched the probe after reviewing newly released communications from top State Farm managers in Texas.  Some of the same communications have led to lawsuits by customers who say they were defrauded by State Farm Lloyds, the Texas subsidiary of the larger insurance company.

The documents in question relate to an alleged cover-up by State Farm management related to its denial of consumer insurance claims for a common type of roof damage that occurs during high wind events and hurricanes.

Jim Warner, a longtime homeowner in Missouri City, Texas, had been a customer of State Farm Insurance for more than 20 years before finding himself in the center of the now brewing criminal investigation.  He says he had never filed an insurance claim until Hurricane Ike in 2008 and had always paid his monthly bills to State Farm on time.

However, Warner filed suit against State Farm after he says the company did not follow through on its slogan that promises, "Like a good neighbor, State Farm is there."  Warner always believed his policy would cover all types of damage to his roof, but when he went to file a claim he says he was shocked to learn that was not the case.

Warner's lawsuit alleges that State Farm documents establish a clear internal policy of intentionally denying consumer claims for roof damage similar to what Warner experienced.  Warner's attorney, Steve Mostyn, claims the systematic denial of those types of claims may have quietly saved State Farm close to $1 billion.

Mostyn says State Farm documents obtained in the lawsuit reveal an attempt by managers to hide the company's policy of non-payment from state insurance regulators.

"They absolutely went through an effort to cover it up," Mostyn said.  "These emails are coming from the top.  They're setting policy.  And that policy by their own admission … shows conclusively they have not paid thousands of people."

In Warner's case, his problems began after he says the high winds of Hurricane Ike caused the shingles on his roof to become "lifted."  Those winds, Warner alleges in his suit, broke the seal under Warner's shingles that normally create a water-tight barrier.  Warner says an independent adjuster he hired agreed the damage was extensive and recommended Warner's roof be replaced.

Warner alleges, however, State Farm repeatedly refused to admit the unsealed tabs were damage that should be paid under the policy.  So Warner filed a consumer complaint with the Texas Department of Insurance, hoping the regulator could help.  However, Warner's lawsuit says it was during that very investigation of his complaint to insurance regulators that State Farm began to cover up its practices of refusing to pay for this kind of damage.

ABC News reviewed documents obtained in the lawsuit including an initial draft of State Farm's response to insurance regulators about Warner's complaint.  In that draft letter, State Farm clearly disclosed how the company did not pay for insurance claims related to broken seals on roofs, saying, "Regarding the detached seals, there is no coverage as this condition is not considered… physical loss."

However, when the "catastrophe section manager" for State Farm saw that statement written out, he directed it be removed from what state regulators would be told, instructing, "This letter needs to be revised to delete the reference to unseal tab."

The reference was subsequently removed, and that same catastrophe manager then forwarded the newly revised letter to other unnamed colleagues at State Farm "for your review" before it was sent off to the state.

Attorney Mostyn says State Farm fought hard to keep from having to disclose those and other documents, but lost the fight.  He says other documents show the insurer attempting to delete other references to the company's policy of not paying lifted-shingles claims.

Warner's lawsuit alleges that nearly 100,000 people may have had their claims for similar problems wrongly denied, estimating that many additional consumers who did not hire independent investigators to inspect their roofs may be unaware they are actually damaged today and susceptible to problems in future windstorms.

ABC News has confirmed grand jury subpoenas have been served to State Farm.

"We have requested a large amount of information from them, and they are complying with our requests," said Cox.

State Farm declined an interview request for this story.  However, the insurer said in a statement that, "State Farm Lloyds is cooperating fully with the Travis County investigation and has successfully settled the majority of civil litigation involving Hurricane Ike claims.  To date, we have paid policyholders more than $1.5 billion dollars, much of which went to repair or replace roofs.  We have been actively working to resolve questions related to roofing shingle claims.  We will continue these efforts to maintain the trust of Texas homeowners, of which more than one in six has placed their confidence in State Farm Lloyd's to protect their homes."

State Farm Lloyds says it will soon file papers with the court disputing the claims made in Warner's recently amended lawsuit.

Copyright 2012 ABC News radio


Survey: 1 in 10 Americans Have Driven without Auto Insurance 

Jupiterimages/Thinkstock(NEW YORK) --  The old defensive driving adage “Watch out for the other guy” appears to be more important than ever considering the results of a new survey, which shows a large percentage of Americans confessing to dangerous driving behaviors, including 10 percent who admit they have driven without auto insurance.

Findings from an online survey about bad driving behavior:

  • Just over 39 percent say they eat or drink behind the wheel.
  • 30 percent say they talk on a cellphone while driving.
  • Almost 10 percent admit to having driven without auto insurance coverage.
  • Nine percent admit to texting while behind the wheel.
  • Just under three percent read or groom themselves (shave, apply makeup) while driving.

The survey involved 1,496 motorists.

Copyright 2011 ABC News Radio


Vietnam Veteran Loses Insurance Over Two Cents

Photo Courtesy - KMGH-TV(THORNTON, Colo.) -- What can make the difference between receiving a potentially lifesaving surgery or not?  For Vietnam veteran Ronald Flanagan, Ceridian Cobra Services determined it's two cents.

Flanagan has multiple myeloma, cancer of the bone marrow, which he has been fighting since September 2008.  He now needs a third stem cell transplant surgery but had lost his health coverage over a two-cent error.

Ceridian Cobra Services, an insurance benefits administrator, dropped Ron Flanagan after his wife, Frances Flanagan, said she mistakenly substituted a seven for a nine when she paid their monthly health insurance premium of $328.69 online.

"If I only had just hit the 9 instead of the 7," Frances Flanagan told ABC News' Denver affiliate, KMGH-TV.  "Everybody we talk to is very surprised that 2 cents is enough to do this."

What two cents was able to undo, ABC News was able to help redo.  When ABC News called Ceridian to comment on the story the company delivered unexpected news.

"We've reviewed the situation thoroughly," said Bart Valdez, Chief Commercial Officer for Ceridian.  "And we're pleased to say...Mr. Flannigan's insurance coverage was reinstated."

When asked whether he would offer Flannigan an apology, Valdez said, "For what specifically? ... We followed the normal procedures that were in complete compliance with the law and with regulations."

Doctors at Presbyterian/St. Luke's Medical Center in Denver, where Ron Flanagan was undergoing treatment, had a stem cell donor at the ready and had told Flanagan they needed to complete the transplant before the end of February, but that was before he lost his insurance.  As of today, Flanagan is trying to get back on the transplant list.

Copyright 2011 ABC News Radio


November Most Dangerous Month for Deer Collisions

Photo Courtesy - Getty Images(WASHINGTON) -- Deer hits are not unusual in November. In fact, your chance of hitting a deer rises threefold this month because this is breeding season. Bucks are chasing does and many end up in the middle of the road.

"It's a big problem, particularly this time of year," says Kim Hazelbaker, a senior vice president of the Highway Loss Data Institute. "We see literally hundreds of thousands of claims that cost insurers hundreds of millions of dollars and these of course have to be paid for by all of us who are insured," he says. The average cost of repairs is between $2,500 and $3,000 when an auto and deer collide.

Drivers in nearly half the country have a medium to high chance of having an encounter with a deer on the road. The most dangerous state: West Virginia, where drivers have a one in 42 chance of hitting a deer.

The number of deer and collisions with autos have been increasing the past several years.

About 200 people lose their lives each year in one of these collisions.

Copyright 2010 ABC News Radio


New Feature on Healthcare.Gov Allows Comparison of Insurance Plans

Photo Courtesy - Healthcare dot gov | Getty Images(WASHINGTON) -- The Obama administration on Friday launched a new feature on which allows people to search for insurance plans in their area.

In the new "Find Insurance Options" section on the site, people can fill out a form with basic medical and demographic information. They will be prompted about the different options they have and a selection of health insurance plans that are available, including price and restrictions.

People will be able to compare information such as monthly premium estimates, annual deductibles, out-of-pocket limits and services covered.

Today's launch is part of the administration's push to create more awareness about the new health care law and make information more readily available to consumers, a majority of whom still don't know what the changes mean for them. It also comes among growing opposition from Republican lawmakers, who argue that the law should be repealed.

Copyright 2010 ABC News Radio

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