State Farm “Outraged” by ABC News Report That It Cheated Katrina Homeowners

By Joseph Rhee

Aug 28, 2006 11:44am

State Farm says it is "outraged" by our recent report on allegations that the company cheated people whose homes were devastated by Hurricane Katrina.    "How the program characterized State Farm’s claims handling is grossly unfair,"said Susan Q. Hood, claims vice president for State Farm Insurance, in a statement posted on the company’s website.

The report, aired on 20/20 last Friday, detailed the claims of two sisters who worked for State Farm’s Katrina offices on the Mississippi Gulf Coast.  Cori and Kerri Rigsby, independent adjusters and claims managers hired exclusively by State Farm, alleged that the company replaced, buried or changed engineering reports so that State Farm would not have to pay the claims.  State and federal prosecutors are now investigating allegations of criminal wrongdoing, and State Farm said it had been "working for months with, and providing documents to" authorities.  According to Hood, "Our claims associates are committed to operating at the highest level of business and ethical standards."

In its statement, State Farm said that engineering reports were only sought in "about 1,100 cases, less than two percent, of the more than 84,700 property claims that we handled in the state of Mississippi." State Farm said that it issued payments on "more than 60 percent of those claims" involving engineering reports. State Farm did not provide information on what happened to the remaining 40 percent of those claims.  State Farm also noted that it had tried to discuss the allegations directly with the Rigsby sisters, but said they have refused repeated requests to do so.  The sisters are now working with attorney Richard Scruggs on a lawsuit filed on behalf of claimholders who allege they were defrauded by State Farm. Read State Farm’s full statement.

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