State Farm was a topic of my speech yesterday at the First Party Claims Conference when an audience member, and then half the room, said State Farm was refusing to accept emails about claims. I am certain many otherwise mature State Farm claims employees must be embarrassed by this unique bad faith claims practice.

I couldn’t believe State Farm claims managers would require this until Judith Vickers, who is an officer of the Georgia Public Adjusters Association, forwarded me an email confirming the practice. This practice should be investigated by all Departments of Insurance and, for numerous reasons, severely sanctioned. Here is the email:

From: Bruce Mulkey <bruce.mulkey.h9zg@statefarm.com>
Date: September 5, 2013 at 9:48:02 AM EDT
To: Judith Vickers
Subject: e-mailing

We have new guidelines which prevent claim reps from having e-mail communications with Public Adjusters. This was effective 9-4-2013. Please call or fax information to me in the future.

I would love to see the memo and internal emails discussing the candid reasons for this new guideline.

Robert Trautman of our Red Bank, New Jersey office was also in the audience. He told me that he was instructed State Farm would no longer accept emails from New Jersey attorneys representing State Farm customers with Superstorm Sandy claims. All I could say was, "you have to be kidding."
Another person in the audience said a State Farm claims person told him it was because State Farm was concerned about virus issues. The question is why this lie would be made, because the rest of the company is using emails to communicate.

Maybe State Farm should advertise that it will accept premium payments by digital wire and premium inquiries by email – but, if you have a claim and hire a professional to help, you will be discriminated against and have your claim delayed. A company that refuses to communicate in a normal fashion clearly has something to hide.

As I expressed in Should the Rust Family Stay in State Farm’s Power and Ownership Given the Recent Record of Policyholder and Corporate Citizen Ethics; State Farm’s Freakoutnomics; Is the State Farm Policy Really Worth Anything? and State Farm Allegedly Defrauded the Illinois Supreme Court and Gave Millions to a Judge Who Would Overturn a Billion Dollar Verdict Against It, there appears to be an ethical failure at the highest levels of State Farm’s management.

Who would allow a culture to exist where management of an entire claims organization would refuse to communicate in the normal course of commercial conduct? The possible answers are obvious and most that I talked to said that they involve dishonesty or incompetence. 

  • Frank Barnes

    This is not a surprise considering State Farm’s nasty and deceptive litigation tactics. They refuse to comply with Requests for Production of Documents–even when it is ordered by the Court. For example, they will claim they didn’t save copies of emails. With this new policy, they can actually say they don’t have the emails. It’s just another litigation tactic aimed at shielding State Farm from any corporate responsibility and to publicly proclaim they are adding to their bad faith claims practices.

  • Chip,

    In the digital age, and how fast things could move in the claims process using email, this is barbaric. It is true, I’ve been told by several adjusters they are not permitted to email public adjusters, but yet a homeowner may use email to contact a claim rep.

    Well written as usual- I completely agree with you.

  • David Bierman

    Chip:

    There must have been a conference where this was mentioned as I am hearing that other insurance companies are also refusing to accept emails from public adjusters

  • And they buy days of time (delay)when documents are sent by snail-mail.
    I would be curious to see if the practice is across the nation or just those claims related to Sandy.

  • Chip Merlin

    Frank, Chris, and David,

    Thank you for taking the time to comment.

    One thing is for certain—this is a wrong practice.

    David–you raise the spector if this is an illegal concerted action. Many insurance organizations should be concerned about the anti-trust aspects of what they do. I often think that those organizations pay lip service to it.

    The real question is whether any regulator or attorney general is left that is a not in the pocket of the insurance industry to take them to task for this documented wrong.

  • Chip, perfect timing on this post. We were just discussing this last week in a group forum.

    I had a thought when I originally saw the SF anti-email response, pertaining to the possible relevance to “UETA”. (Uniform Electronic Transactions Act) However, I would need one of the attorneys here to confirm if this law is applicable to the specific situation described in SF’s email. I remembered this to be mainly aimed at legitimizing contractual obligations made via email, and to confirm that “electronic communications” satisfies the same record requirements as a “written, physical document” would. So I would think that this is also relevant to normal business communications, but that is just my laymen perspective.

    It seems that this act was adopted by Florida, and can be found in the 2011 Florida Statutes, under Title XXXIX, chapter 668, and “seemingly” discussed in section 50 (668.50). “The 2011 Florida Statutes > Title XXXIX > Chapter 668 > Section 50”

    http://www.flsenate.gov/laws/statutes/2011/668.50

    Here is some commentary regarding the original act (UETA), and how it applies to electronic communications, quoted from a Bloomberg Law article.

    “Indeed, most states have adopted the Uniform Electronic Transactions Act (“UETA”), which provides that a “contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation” and that “[i]f a law requires a record to be in writing, an electronic record satisfies the law.”29 Unif. Elec. Transactions Act §§7(b)-(c). The UETA defines an electronic signature to mean “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” §2(8) (emphasis added).”

    Chip, is this act applicable to the situation highlighted in SF’s anti-email “emails”?  If this specific section is not relevant, I would imagine that another section of chapter 668 may cover it. Or is this barking at the wrong tree?

    Thomas Di Sieno
    Digitory Solutions, Inc.

  • BTW,one recent example that a Florida PA received, SF blamed it on state statutes and regulatory requirements… seems that they are not even in agreement to WHY they cannot except email communications.

    To the PA,

    “To ensure compliance with statutory and regulatory requirements, SFFIC, is unable to accept email communication from your firm”

    Any written correspondence from your firm should be sent via us mail to
    SFC
    PO Box xxxxxx
    Atlanta, GA xxxxx-xxxx

    or fax to
    xxxxxxxxxx

    Please be advised that SF will be sending all written communications to your firm via us mail and/o fax

  • Evan Wolfe

    Chip:

    I deal with this against State Farm in Florida, New Jersey and Colorado. Their central fax system works pretty well and the response time is a few days.

    I guess State Farm doesn’t realize that by faxing their letters, which contain lies and deceit, they have given us evidence of insurance fraud and mail fraud as well.

  • Allstate Catastrophe Claims will also refuse email comunications with public adjusters. Most, but not all local staff adjusters are permitted to use emails with PA’s. I have been told by State Farm staff adjusters over the last few years that they are not permitted to use emails with PA’s. So the email Ms. Vickers received recently from State Farm is surprising to me since this practice had been going on for years in Southeastern Pennsylvania.

  • Allstate Catastrophe Claims will also refuse email comunications with public adjusters. Most, but not all local staff adjusters are permitted to use emails with PA’s. I have been told by State Farm staff adjusters over the last few years that they are not permitted to use emails with PA’s. So the email Ms. Vickers received recently from State Farm is surprising to me since this practice had been going on for years in Southeastern Pennsylvania.

  • Annie Craven

    Wow I can’t believe that in this day and age State Farm would all of a sudden change back to faxing instead of the fast and easy use of email, seems pointless.

  • Robert Hugh Joslin- CPPA

    Chip,

    I have some documents I sent to your email for your perusal concerning the insurance industry’s desire to communicate ectronically. It includes statements, amoungst others- from Robert (Bob) Nash- National DOI General Counsel for State Farm.

    Aloha.

    Oh… it’s 85 outside…

  • Charles Hoole

    SAVE THOSE BUSINESS REPLY ENVELOPES FROM THE CARRIERS. I send those pasted onto an envelope if I have a large set of documents to send to them. They must think that attorneys and PA’s are the only people that get spammed it seems ludicrous to me. Maybe they are telling the world that their networks are really not very secure. For a while SF was using e-mail, now they have stopped again.