Mansell, Engel & Cole

National insurer under fire for alleged fraud in OK lawsuit

Did insurance giant Farmers play fair?

Eight Oklahoma plaintiffs insist that the company did not concerning its conduct regarding their claims for storm-linked property damage. Their stated dismay with the national insurer has led to their filing of a lawsuit in Cleveland County.

The complaint was commenced despite settlement pacts signed by all the policyholders in late 2016. Those agreements mandated the continued confidentiality surrounding the terms of their claim demands and recoveries.

The insureds state that relevant restrictions governing the settlements went out the proverbial window following their execution, though, for one overt and obvious reason.

Their lawsuit underscores this key claim: Farmers breached the confidentiality ban in bad faith by providing protected claim information to a database widely used by insurers to assess policy applicants’ coverage eligibility and premium rates.

The core contention of the plaintiffs is that the claim-linked data provided by Farmers to the Comprehensive Loss Underwriting Exchange (CLUE) was deceptively false, vastly overstating policyholder claims. In one cited instance, the insurer allegedly reported to CLUE that is paid out nearly $3 million to a couple to cover tornado damage to their home. Reportedly, the actual compensation totaled only $7,000.

As a result, contend the plaintiffs, they are likely to be wrongly perceived in the insurance realm as high-risk individuals. Other insurers relying upon the CLUE data might deny them coverage or subject them to inordinately high premiums.

Farmers, which provides coverage in all 50 states, has formally denied all allegations in the lawsuit. The company has not publicly commented on the matter.

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