Meanwhile the Long Promised State Farm Market Conduct Study Almost Complete

At his insurance forum in early March of this year Insurance Commissioner Chaney mentioned his office’s market conduct study of State Farm was almost complete. It looks to be comprehensive too as the Anita Lee’s story makes clear it not only will cover State Farm’s behavior but will also include Jim Hood and the Rigsby sisters.

At this point I’ll acknowledge the rumors on the street predict the study will be a complete whitewash of the events here after Katrina. Lee Harrell acknowledges those rumors too. After reading the story I now wonder if they are true.  Here is today’s Sun Herald story:

The state will finish a study of how State Farm Fire & Casualty Co. handled claims after Hurricane Katrina by month’s end, Mississippi Deputy Insurance Commissioner Lee Harrell said Wednesday.

The study, anticipated before the end of 2007, began 18 months ago. Former Insurance Commissioner George Dale ordered it because of consumer complaints about how insurance companies handled Hurricane Katrina claims.

Dale said State Farm claims were examined first because the company is the largest property insurer, with 30 percent of the market at the time Katrina hit August 29, 2005. Dale was defeated in his re-election bid. Commissioner Mike Chaney inherited the market-conduct study when he took office.

“We’re in the final stages of wrapping that up,” Harrell said. “It’s taking a lot longer than anybody anticipated. There are a lot of theories out there and a lot of allegations.”

State Farm representatives have pointed out that market-conduct studies are not unusual after a catastrophe.

“We continue to provide information to the commissioner and his staff, just as we’ve done all along,” State Farm spokesman Fraser Engerman said.

Harrell said examiners for the department have in some instances had to wait behind federal investigators reviewing some of the same information.

The U.S. Attorney’s Office in Mississippi’s Southern District has so far declined to prosecute a lawsuit in which two former claims adjusters accuse State Farm of defrauding the federal government.

State Farm has denied any wrongdoing, instead accusing Mississippi Attorney General Jim Hood of “conspiring” with policyholders’ attorney Dickie Scruggs to pressure the company into settling Katrina claims.

Over the past few months, State Farm has fended off Hood’s criminal investigation and won court rulings that disqualify Scruggs and his legal associates from representing policyholders in Katrina cases and bar the two former claims adjusters, Cori and Kerri Rigsby, from testifying for policyholders.

U.S. District Judge L.T. Senter Jr. ruled that Scruggs and associates breached legal ethics by paying the Rigsbys consulting salaries after they took thousands of pages of State Farm records in June 2006, informed the company and lost their jobs.

The state’s market conduct study delved into all these areas.

“There’s not going to be a report that makes everybody and his brother happy,” Harrell said. “What I’m concerned about is making sure the facts and the truth are out there. And that’s what our report is going to do.”

7 thoughts on “Meanwhile the Long Promised State Farm Market Conduct Study Almost Complete”

  1. Looks like Mike Chaney inherited that market conduct study and Lee Harrell. As a public official he has to own a ten foot pole, but i bet he is not looking forward to using it on this one.

  2. The big red flag sticking out of this story – “the examination (market conduct study) is being paid for by State Farm” – is going to stick Chaney with Dale’s “paid for by State Farm” baggage.

    Lee Harrell “making sure the facts and truth are out there” only adds to the load dumped on Chaney – as Harrell’s comments in this story add red flag after red flag warning Chaney of the danger ahead.

    Hope he heeds them.

  3. Did anyone read the story last night as the Sunherald broke it. There was mention of someone hired by State Farm to assist in some capacity. Todays story does not include that information.

  4. Here is the link Duesouth. State Farm is paying for the entire study (I believe by operation of law).

    Nowdy, you picked up on what caused me heartburn. I would hope Comissioner Chaney would thoroughly review the report before it is released. There is a bad blood between Dickie Scruggs and Lee Harrell. Comissioner Chaney does not have to tote that baggage IMHO.

    I have not met Mr Harrell but I did form an impression of him at Comissioner Chaney’s Insurance Forum. I’ll keep that to myself for now.


  5. I haven’t met Harrell, Sop, but I don’t need to meet him to know he’s very political and there’s only room for one IMO and that’s Chaney.

    He’s got too much personal credibility at stake to have anything to do with a report that investigates the role of Jim Hood or the Rigsby sisters – if indeed doing so falls within the scope of a market conduct study and/or is allowable by law.

    If I were Hood or the Qui Tam attorneys, I’d be on this like white on rice.

    All the more reason for Chaney to grab that 10 ft pole – the idea of a State Farm paid for study coming out with the color of official light don’t wash – when it’s so obviously exceeding a review of how claims were handled.

    The time for a market study to do that has long passed – it’s a matter the courts are deciding now and could drag Chaney in the middle of that whole mess.

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