Oklahoma AG Intervenes Against State Farm Over Homeowners Insurance Claim Practices

Oklahoma Attorney General Gentner Drummond has taken a significant legal step by intervening in Hursh v. State Farm, one of more than 200 lawsuits filed against State Farm by the Oklahoma City law firm Whitten Burrage. The cases allege State Farm engaged in a widespread scheme to reduce payments on homeowners' wind and hail damage claims by 50% starting in 2020. This scheme, according to the allegations, has cost policyholders hundreds of millions in Oklahoma and billions nationally, with State Farm settling numerous cases secretly to suppress information about the practice. Drummond's intervention invokes his authority under Oklahoma statutes, including the Oklahoma Consumer Protection Act, the Oklahoma Racketeer-Influence and Corrupt Organizations Act, and the Oklahoma Deceptive Trade Practices Act. The petition cites violations including civil conspiracy and unjust enrichment, framing State Farm's actions as harmful not only to individual policyholders but to the integrity of Oklahoma's insurance market and economic welfare broadly. This action reflects the Attorney General's power under the parens patriae doctrine to protect state residents and their business interests against deceptive and unfair insurance practices. The case also underscores a legislative tension in Oklahoma between the authority of the Attorney General and the insurance commissioner, Glen Mulready, especially in light of new laws like the 2024 Insurance Data Security Act which grants broad powers to the commissioner. Drummond's office had recently requested collaboration with Mulready's department to address rising homeowners insurance premiums, which may contribute to conflicts in regulatory oversight. The ongoing litigation and the Attorney General's intervention could lead to penalties, damages, structural reforms, and recovery of profits allegedly gained by State Farm through the contested scheme. The broader context includes concerns about market competition in Oklahoma homeowners insurance and recent controversies such as CompSource Mutual's misleading claims about demutualization plans. This series of cases highlights critical regulatory, legal, and market dynamics affecting the homeowners insurance landscape in Oklahoma, with implications for compliance, consumer protection, and insurer accountability.