State Farm subsidiary agrees to $100 million settlement
State Farm Fire and Casualty Company – a subsidiary of US insurance giant State Farm – has agreed to pay the federal government some $100 million in restitution over its alleged mismanagement of flood insurance claims related to Hurricane Katrina.
The insurer will pay the $100 million in restitution to the federal government, and not to individual policyholders.
According to the Associated Press, the settlement marks the end of legal proceedings which began over 16 years ago, when former adjusters Cori and Kerri Rigsby filed a lawsuit against State Farm for allegedly shifting state claims to the federal National Flood Insurance Program (NFIP) when the claims should have been paid by private insurance instead.
As part of the settlement, State Farm has also agreed to dismiss the counterclaims it filed against the Rigsby sisters. The insurer had alleged that the two had breached their employment agreements and infringed other laws by taking the company’s documents while working as independent contractors.
Read more: Top 10 largest home insurance providers in the US in 2022
Parent company State Farm was ranked the largest home insurer in the US by the National Association of Insurance Commissioners for 2022. As of April 2022, State Farm commanded 24.26% of the US home insurance market, with direct premiums written of $22 billion and direct premiums earned of $20.7 billion.