State Farm Reports $5 Billion in Catastrophe Claims Payments

State Farm has already paid out $5 billion this year to replace cars, rebuild homes and cover other damage from weather-related catastrophes, the company announced Sunday.

As of Sept. 23, State Farm representatives had helped policyholders with more than 970,000 claims from catastrophes ranging from wildfires in Texas to tropical storm damage in New England, according to company officials. That was in addition to regular auto, home and business claims, which typically number around 11 million to 12 million annually, State Farm said.

“Together, we’ve been able to help millions of people recover from everything from routine traffic accidents to devastating tornadoes. More importantly, they know we’ll be ready to help them tomorrow as well,” Executive Vice President Brian Boyden said in a news release.

The insurance industry typically defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of policyholders and coverage providers, according to the Insurance Information Institute (III).

The $5 billion includes payments on claims from 2011 and some payments related to catastrophes that took place in previous years, according to the company.

State Farm officials said they expect this to be a particularly costly year for catastrophe losses because of “a summer of wildfires, tropical storms and hurricanes (that) followed a spring of relentless tornadoes and hail storms.”

Catastrophe claim payments have been made to Alabama auto insurance policyholders and other State Farm customers in more than 40 states and the District of Columbia, according to the company.

State Farm’s announcement follows major catastrophe losses reported recently by other insurers.

Progressive released data earlier this month showing it lost $37 million to catastrophes in August, decreasing the company’s profits by 66 percent compared with the same month the previous year. Progressive’s catastrophe losses in August 2010 were only $2.2 million.

And Allstate announced that it suffered $735 million in catastrophe losses last month, including about $500 million from Tropical Storm Irene. The company said its estimated pretax losses from Irene and seven other storms in July and August added up to $865 million.

Allstate reported $2.3 billion in losses from tornadoes, wildfires and wind and hailstorms in the second quarter of 2011.

State Farm’s Boyden said the insurer has 4,300 catastrophe claim specialists and thousands of other representatives helping policyholders at sites nationwide.

“The unrelenting, widespread volatile weather continues to cause problems for our policyholders,” he said.

To research how State Farm performs when handling claims, consumers can read user-submitted State Farm auto insurance reviews online.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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