Yesterday, in “When Will Insurers Advertise That They Found a Way to Pay You More?” I raised questions about the insurance industry’s fascination with claims efficiency and reducing costs. I suggested that claims professionals should be just as interested in finding overlooked damage and increasing payments when the facts justify it. While some insurers like Chubb, AMICA, and PURE have a better reputation for claims payment, nobody seems to advertise the goal of full and prompt payment.
Today, I want to invite policyholders, public adjusters, restoration contractors, insurance company adjusters, and claims executives to take a fascinating look behind the curtain at how the nation’s largest homeowners insurance company manages its claims operation. A pending Oklahoma bad faith lawsuit against State Farm has produced internal company documents that I believe everyone involved in property insurance claims should read. The case is Billy and Lacy Hursh v. State Farm Fire and Casualty Company, pending in Oklahoma County. 1 Following a September 28, 2026, ruling removing confidentiality designations from certain documents, the policyholders filed a Notice of Supplemental Authority with two remarkable exhibits.
These materials provide a rare opportunity to examine internal claims management reports and an executive-level plan for directing, monitoring, and evaluating claims operations. As insurance coverage and bad faith litigators, we obtain these types of documents routinely in bad faith and claims practice litigation. But the judges usually issue protective orders and confidentiality orders so we cannot show them or discuss them. The case settles, and the public has no idea how much management oversight is given to paying as little as possible by many insurers.
What immediately caught my attention in the State Farm filing was the extraordinary level of management oversight contemplated in these documents. We often talk about the individual claims adjuster as though that person independently determines what an insurance company will pay. Yet the State Farm materials describe a sophisticated management structure involving executive supervision, automated claim decisions, performance measurements, preferred vendors, quality reviews, and intervention by claims leadership. The documents address virtually every stage of the claims process, from the moment a loss is reported through coverage decisions, damage evaluation, repair options, and final resolution. This is not simply a supervisor checking an adjuster’s work. It is a proposed management system designed to influence how an enormous claims organization operates and to measure the results.
One exhibit, a June 2021 State Farm claims-quality report, is particularly interesting because it identifies several developments as positive quality indicators. These include a declining ratio of total roof replacements to partial roof replacements and a 13 percent year-over-year decrease in wind and hail estimates exceeding $10,000. The report also tracks claims closed without payment. Perhaps these trends resulted from more accurate adjustments. Perhaps some reflected changes in the handling of claims that deserve much closer examination. But here is the question I want every reader to consider: Why are those particular financial and claims outcomes identified as positive quality indicators, and what message does that send to the people making claim decisions?
Another exhibit contains a September 2020 executive operating-model presentation discussing what it calls “outcome-based claim handling.” It identifies ambitious operating goals, including making coverage decisions much earlier, dramatically increasing virtual inspections and preferred-vendor involvement, expanding automated decisions, and directing leadership intervention based on claim characteristics. The presentation also projects hundreds of millions of dollars in expense and efficiency improvements. Those financial projections are not, by themselves, evidence of reduced insurance benefits. Nevertheless, the combination of management objectives, claim outcome measurements, and executive oversight deserves careful scrutiny.
I have known many dedicated and highly ethical insurance company claims professionals over my career. They want to pay what is owed and do an excellent job for their policyholders. Indeed, State Farm’s presentation expressly identifies “Pay What We Owe” as an important objective. I do not question the legitimacy of insurers trying to eliminate unnecessary administrative expenses or improve the accuracy of their claims decisions. What concerns me is the pressure that can develop when corporate management sets measurable goals tied to indemnity claim outcomes and then closely monitors the employees responsible for achieving them. What happens when an adjuster’s honest assessment of damage produces a result that does not fit management’s expectations or goals?
The plaintiffs contend that these documents support their allegations of improper claim handling and efforts to reduce payments. State Farm disputes the allegations. The court’s decision to remove confidentiality designations is not a finding that State Farm acted in bad faith. Those distinctions matter. But we do not need a final judicial determination to recognize the importance of understanding how claims organizations are managed and what measurements their leadership considers evidence of success.
I encourage readers to read all the documents. Do not stop after reading the lawyers’ arguments in the first several pages. The truly interesting material begins with Exhibit 1 on page 8 and Exhibit 2 on page 11. Take your time studying the actual State Farm documents. I suspect many public adjusters and restoration contractors will recognize some of the management practices reflected in them, while policyholders may be surprised to discover how much planning and oversight can exist behind what appears to be an individual adjuster’s decision.
Tomorrow, I intend to examine some of the more specific management goals, reporting practices, and financial measurements contained in these exhibits. We will also consider what they may tell us about the pressures facing insurance company adjusters and whether the measures used to determine claims department success are consistent with the fundamental obligation to fully and fairly investigate and pay covered losses.
For today, my request is simple. Read these documents and think about the management decisions being made long before any particular policyholder files a claim. When the curtain is lifted, we sometimes discover that the person standing in front of us is not the only person influencing the decision.
Thought for the Day
“Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”
— Louis D. Brandeis
1 Hursh v. State Farm Fire and Cas. Co., No. CJ-2025-2626 (Okla. Dist. Ct.).
