A Response to a State Farm discovery motion and its exhibits, recently filed in an Oklahoma State District Court, 1 contain a great deal that claims professionals should study. I intend to follow up with additional posts examining the remainder of the motion and the exhibits. Those documents deserve careful treatment rather than one hurried summary. But one point is too important to wait.
An internal State Farm document reports:
Industry Best FRR on light wind and small hail averages a 5-10% frequency, therefore an internal quality improvement opportunity of 53-58% for light wind and 80-85% for small hail (Source: Accenture Consulting Services). 2
“FRR” appears to mean full roof replacement. State Farm’s internal analysis reportedly found that it was paying full roof replacements at a 63% frequency for certain wind claims and a 90% frequency for certain hail claims. Accenture’s supposed “industry best” replacement frequency of 5% to 10% was then used to describe an enormous “quality improvement opportunity.”
The immediate question is obvious: How did Accenture know what the insurance industry’s “best” replacement frequency was? Did Accenture obtain claim information from State Farm’s competitors? Was the information anonymized? Did the competitors knowingly supply it? Were the policies, weather events, roof ages, building codes, damage criteria, and claim populations actually comparable? Was the figure based upon closed claims, inspections, payments, recommendations, or something else entirely?
Those are legitimate questions. Accenture’s statement of work, final reports, underlying data, methodology, and communications should be obtained and studied. The unanswered methodology question may reveal something even more damaging than whether competitors shared information.
The deeper problem is that State Farm may have confused payment frequency with claims accuracy. A low roof-replacement frequency does not prove accurate claim handling. It proves only that fewer roofs were replaced. Those are not the same thing.
A claims department could achieve a remarkably low replacement frequency by denying every roof claim. That would certainly produce an impressive-looking spreadsheet. It would not produce accurate claim decisions.
Whether a particular roof should be repaired or replaced depends upon the policy language, the physical damage, repairability, matching requirements, applicable building codes, roof condition, material availability, weather data, and the facts developed during a reasonable investigation. None of those questions can be answered simply by announcing that other insurers allegedly replace only 5% to 10% of roofs in some undefined population.
Even the phrase “industry best” deserves scrutiny. Best for whom? Was it best for the policyholder whose damaged roof needed replacement? Was it best for the adjuster trying to make an honest claim decision? Or was it “best” because it produced the lowest indemnity payment?
An insurer’s contractual obligation is not determined by how frequently its competitors pay similar claims. If every insurer in America underpaid a particular type of loss, that would not rewrite the insurance policy or make the underpayment proper. It would suggest an insurance claims industry that is seriously flawed about what “good” results mean.
This is why the benchmark may be more damaging than the information-sharing issue. State Farm could conceivably offer an innocent explanation for how Accenture developed its number. Accenture may have relied upon anonymized consulting data, surveys, estimates, or other aggregated information.
Yet even a lawfully obtained number becomes dangerous if State Farm used it as a target for claim outcomes. The crucial question is not merely, “Where did the 5% to 10% number come from?” The crucial follow-up is, “What did State Farm do with it?”
The motion and exhibits suggest that State Farm compared its existing replacement frequency against Accenture’s much lower figure, characterized the difference as an “internal quality improvement opportunity,” developed wind-and-hail tactics, increased management involvement in replacement recommendations, and monitored roof-replacement results. If discovery establishes that claim personnel were being measured, coached, reviewed, or pressured toward fewer full roof replacements, the case stops looking like an isolated disagreement over one roof. It starts looking like a claims system designed around a preferred financial outcome.
Calling the desired reduction “accuracy” does not resolve that problem. Indeed, using that word may make the evidence more troubling. Accuracy should be measured by whether State Farm paid what its policies required on each claim. It should not be measured by how closely State Farm approached a consultant’s low-payment frequency.
State Farm’s own agent reportedly warned senior leadership what the system looked like from the ground. The motion reproduces this warning from agent Tracy Haus. I am quoting it exactly as it appears in the brief, including its capitalization and grammar:
The old slogan of “we pay what we owe, not a penny less, not a penny more” is not the case right now. We now pay really low and customers fight to get what we owe them in more and more cases. In my 20 years I have NEVER had to worry about the reputation of State Farm. Even when we have raised rates and been uncompetitive, I always knew even if customers were paying more to be with us, we would come through at claim time! #ClaimTimeIsGameTime. I have heard for years now about Allstate’s declining reputation when it comes to claims. I have taken so many of their customers all while paying more to be with us in most cases. I know I am not the first to send an email about the issues we are having in claims, I certainly hope you are receiving A LOT of communication from agents letting you know what’s happening to our company from the ground. I have been involved in many agent discussions, email groups etc. about fire claims problems, and specially Roofing issues. I had faith that you all were handling it and that you knew by word of sales leaders and claims team managers that are on the ground that its really bad. But when I heard the slogan from a very reputable roofing company owner, “You are not in good hands and we are not your good neighbor” …I was very upset. That’s the slogan around the country, not just here in Louisville. He sent me screen shot after screen shot of reputable companies that for years have loved working with us and now say we are just as bad as Allstate. And if we choose to ignore the contractors then we must listen to our clients. Calls have increased, almost every roofing claim we have the customer is unhappy, the process is laborious, and 8/10 times we end up paying what we should have in the beginning but end up with a mad customer and a tarnished reputation. My team is spending more and more time on claims and being pulled away from selling. For the last 6 months the roofing claim problems have grown.
…
what is being done to look at and hopefully change the way Roofing claims are being handled? This system is not only broken it is taking us down quicker than you can imagine. Its gone from bad to worse in record time. Word of mouth travels far and right now body shops to rental car companies to contractors are screaming from the rooftops and not saying nice things. Right now, our adjustors (4 in Louisville) are not the problem they are the solution. Roofing contractors would say we have a great team. Inspectors are being sent out to measure and photo roofs and hand out a very small estimate to REPAIR knowing that in a lot of cases it should be much more than that. They are afraid to get their hand slapped and are in the pockets of State Farm so they are low balling at best and almost NEVER replace a roof. 3
This warning letter is reputationally devastating because it did not come from someone like me, or a disgruntled policyholder, or a public adjuster, or a roofing contractor. It came from inside State Farm’s own agency system.
It also reportedly told leadership that many claims eventually resulted in State Farm paying what should have been paid initially, but only after the customer fought, the agent became involved, and the company’s reputation was damaged. Forcing policyholders to file suit to obtain benefits is a claims practice violation.
I suggest that this is a danger all claims management professionals routinely face in today’s modern claims environment. Some turn a consultant’s frequency benchmark into a claims-management objective. The first estimate may become artificially low, the policyholder is forced to fight, some decisions are eventually corrected, and management can still point to reduced initial replacement recommendations as evidence of “improved accuracy.”
Policyholder attorneys should not let the discovery inquiry end with whether Accenture received competitor information. They should determine who selected the benchmark, what population it represented, what Accenture was asked to accomplish, who validated the methodology, whether anyone examined claim accuracy rather than payment frequency, and how the number affected adjuster authority, management reviews, training, reinspections, performance measurements, and individual claim decisions.
The most important question may be, “Before State Farm used Accenture’s 5% to 10% figure to influence its own roof-replacement decisions, what did State Farm do to determine that the figure represented correct payments under State Farm policies rather than merely fewer payments by other insurers?”
I will address the remainder of the motion and its numerous exhibits in follow-up posts. There is much more to examine. But this benchmark deserves immediate attention because it reveals the difference between an insurer using data to improve claim accuracy and an insurer using the language of “accuracy” to institutionalize lower claim payments.
Thought For The Day
“We’ll keep measuring our progress the way customers do – by showing up, following through, and delivering when it matters most.”
—Jon Farney, President and Chief Executive Officer of State Farm
1 Plaintiffs’ Response to State Farm’s Improper Notice of Motion to Consolidate the Depositions in this Case with a Case Pending in Another County, West v. State Farm Fire & Cas. Co., No. CJ-2025-135 (Okla. Dist. Ct.- Comanche County, filed Aug. 21, 2026).
2 Id., Exhibit 10.
3 Id., Exhibit 17.
