State Farm pocketed $1.4B as weather and roof claims worsened, unsealed records show

It seems State Farm has not been a good neighbor for quite a while.Worsening storms battered Oklahoma roofs for years.State Farm’s payouts, it turns out, didn’t exactly keep up.A trove of internal documents unsealed by a Comanche County judge, first reported on by NBC News, shows the insurance giant quietly rewrote its own rulebook on hail and wind damage starting in 2020, squeezing nearly a billion and a half dollars out of policyholders in a single year. The paper trail now sits at the center of a legal war engulfing nearly 1,000 Oklahoma homeowners and the state’s top law enforcement officer.One internal email spells out the bottom line in blunt corporate math.“Volume down while severity up quite a bit,” a State Farm claims manager wrote.

“About a $1.4B decrease in indemnity from 2020 to 2021.”The same message tracked how roof replacement ratios cratered under the new approach.“When we started this work, we were replacing roofs at a rate of 5.6 to every 1 we repaired.In 2021 we landed at 2.0 for every 1 and 2022 increased to 2.2 to every 1,” the email continued.Another executive calculated that trimming approvals by a single percentage point was worth a staggering sum across the company’s claim volume.“Each % point difference is about 5k claim, so if we didn’t pay for 1% of claims that did not have damage and were not covered but would have been paid for before based on lack of skill/will, that is 5k claims at $15,768 avg severity of $78.8 million,” the executive wrote.The operation traced back to an internal hunch that State Farm was too generous compared to competitors on small hail and wind claims.

A 2020 business plan flagged roofs as the biggest lever the company could pull, noting they made up 70% of claims and 57% of what State Farm paid out.“If in fact Full Roof Replacements is our biggest bucket of opportunity,” one exchange between claims managers read, “We think our best option is to first focus on small hail/light wi...