State Farm sues Texas AG over investigation demands

By Jessica M. Karmasek | May 4, 2012


AUSTIN, Texas (Legal Newsline) - One of Texas' largest providers of homeowners insurance is suing Attorney General Greg Abbott to block an investigation over whether the company denied renewed coverage on more than 11,000 policies in the state's Gulf Coast region.

State Farm Lloyds filed its nine-page complaint in Travis County District Court last week.

Abbott's office sent civil investigative demands to State Farm on April 16, seeking information about its decision not to renew the policies.

State Farm, in turn, filed its petition with the district court April 26, asking it to set aside or, alternatively, modify the attorney general's CID.

The insurer wrote that it was filing the petition to "preserve its rights."

"We remain committed to protecting our policyholders from the unexpected," State Farm spokeswoman Patti Kelly said Friday.

"Our customers are our highest priority, and in order to ensure we can keep our promises to all our Texas homeowners customers, we must find the appropriate balance between exposure, the resources available to maintain a quality level of service, and our ability to meet our financial obligations."

Kelly said State Farm is cooperating with the Texas Department of Insurance and its ongoing market conduct examination of the company's coastal non-renewal activity.

She also noted that the TDI was informed of the company's plans for the recent non-renewals in December, and the state agency was provided with additional requested information prior to implementation.

Kelly would not specifically comment on the petition involving the attorney general.

On Tuesday, Abbott issued his own statement regarding State Farm's lawsuit:

"The largest issuer of homeowners insurance in Texas has filed a lawsuit in an attempt to prevent the Attorney General's Office from investigating its non-renewal of thousands of residential property insurance policies along the Gulf Coast," the attorney general said.

"Given the number of Texans that are affected, we want to ensure that State Farm complies with the law. If State Farm has not done anything wrong, it's certainly curious that they would go to court just to avoid the State's subpoenas."

Abbott said, to date, State Farm has not produced "a single document" in response to the subpoenas his office issued.

The insurer argues otherwise in its filing.

"Since receipt of the CID, State Farm's counsel has communicated with the AG both orally and in writing," it wrote.

"Counsel for State Farm has offered to provide the AG copies of all documents provided to TDI as part of TDI's examination of State Farm's non-renewal of residential property insurance along the Gulf Coast."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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