Pretty much sums up the feeling of the populace here in the wake of the release of the Mississippi Insurance Department’s State Farm Market Conduct Exam. Personally I’m grateful the commissioner ignored the results of his examiners own testing as it reveals him for the captured regulator he is. As Anita Lee reports others on the coast don’t feel quite the same way:
Policyholders’ attorneys wonder why the Insurance Department’s Market Conduct Examination of State Farm found the company underpaid claims, but stopped short of concluding the conduct was intentional.
“In lieu of finding this was an intentional decision by State Farm and holding them accountable for it,” said attorney William F. “Chip” Merlin, “they let them off the hook.”
The most contentious claims, and those the examination considered in detail, involved Coast properties destroyed by wind and water. In many cases State Farm denied payment, instead blaming storm surge covered by federal flood insurance. The market-conduct exam concluded that, of 800 claims files reviewed, 173 lacked documentation to show State Farm had fulfilled its obligation to fully investigate.
The department found payments were denied to 64 of 101 homeowners – or 63 percent – “despite indications of some wind damage.”
Anita Lee makes a rare msitake as it was 173 of 688 applicable files (Exhibit A, PDF page 23) not 173 of 800, which sample included claims on policies that were wind excluded (X-Wind) that were disregarded for purposes of certain of the attribute testing.
In the end it is clear our insurance commissioner thinks it is fine for an insurer to summarily deny covered claims without adjustment and then string out their homeless policyholders for 18 months playing games. Anyone who previously thought MID is for anyone other than big insurance was cured of that notion with the release of Mr Chaney’s conclusions yesterday. His own report tells a much different story from the conclusions he reached.