Fallout from State Farm insurance video alarms consumer advocates

OAKLAND, Calif. - A viral video showing a State Farm executive talking about raising insurance rates is seeing continued fallout and is raising the alarm among consumer advocates.  

What we know:

From watching the video, one could conclude that the now-fired State Farm executive told a person in a bar that State Farm was and is manipulating the California Department of Insurance to get higher rates.   

The video, posted on YouTube by the O'Keefe Media Group, was created by James O'Keefe, the founder of Project Veritas, a right-wing activist organization known for secretly recording and releasing deceptively edited videos.               

The person asking the questions, who apparently used a hidden camera, was later identified as a reporter from a website called OMG.

The reporter asked, "I heard that the insurances pulled out of California fire. It seems like it's all, I don't know, orchestrated?" 

Haden Kirkpatrick, the now-fired State Farm executive, responded, "I mean it kind of is, but not in the way you would think. We go to the Department of Insurance and say, 'We're overexposed here. You have to let us catch up our rating,'"

If the Department does not agree?  

"We'll say, ‘OK, then we are gonna cancel these policies,’" Kirkpatrick said on the video. 

State Farm has responded by saying, "These assertions are inaccurate and in no way represent the views of State Farm. They do not reflect our position regarding the victims of this tragedy, the commitment we have demonstrated to the people of California, or our hiring practices across the company. The individual in the video is no longer affiliated with State Farm."

The other side:

But consumer advocate and attorney Harvey Rosenfield, author of insurance reform Proposition 103, says this tactic has gone on for two years, forcing people into the lesser coverage, more expensive Fair Plan. 

"If they didn't get what they wanted from the Commissioner, they say, 'Well, then we're gonna have to non-renew a bunch more people,'" said Kirkpatrick. "As soon as State Farm started to do it, all the other insurance companies began to do the same thing." said Rosenfield.

The Department of Insurance has already granted State Farm big increases and is asking for another, apparently in violation of Prop. 103. 

"Comes just as the Commissioner is trying to figure out if he's gonna give them a specific bailout of nearly a billion dollars that would cost people $600 a year," said Rosenfield.

Consumer advocacy group, United Policyholders, said petitions for rate increases should be filed along with enough evidence to justify them.  

"It's disturbing that State Farm would use a threat of non-renewing homeowners as a political strategy to pressure the department to get these rate increases approved," said United Policyholders' Emily Rogan. 

I repeatedly asked the Department of Insurance about all of this as well as two insurance industry trade groups. No substantive response. The big question is: will State Farm continue with non-renewals and cancelations, making the insurance crisis even worse? 

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Secret video: State Farm exec appears to confess to manipulating California insurance rate hikes

The video appears to have been recorded sometime after the Southern California wildfires, and references the Palisades Fire in particular.