State Farm Fire and Casualty Company, a division of the US insurance behemoth State Farm, has agreed to make a $100 million payment in reparations to the federal government for allegedly mishandling flood insurance claims resulting from Hurricane Katrina.
Instead of paying individual policyholders, the insurer will pay the federal government $100 million in restitution.
The lawsuit against State Farm was filed by former adjusters Cori and Kerri Rigsby more than 16 years ago, accusing them of improperly transferring state claims to the federal National Flood Insurance Program (NFIP) when private insurance should have been responsible for paying the claims, according to the Associated Press. With the settlement, the legal battle is now over, ending the lengthy legal process.
State Farm has also consented to dismiss the counterclaims it brought against the Rigsby sisters as part of the settlement. The two were accused by the insurance of violating their job contracts and other regulations by stealing the business’s documents while acting as independent contractors.
The National Association of Insurance Commissioners named parent firm State Farm as the top US home insurer for 2022. State Farm controlled 24.26% of the US home insurance market as of April 2022, with $22 billion in direct premiums written and $20.7 billion in direct premiums earned.