Former State Farm Vice President, Haden Kirkpatrick, found himself in hot water this week after being fired by the insurance giant for controversial comments made during a Tinder date in January. The conversation, recorded undercover, revealed Kirkpatrick discussing the company’s premium hikes in response to the California wildfires. In the recording, Kirkpatrick was heard stating that State Farm’s request for a premium rate increase was somewhat orchestrated, but not in the way one might suspect.
During the candid conversation, Kirkpatrick mentioned, “Our people look at this and say, ‘S—, we’ve got like maybe $5 billion that we’re short if something happens.’ We’ll go to the Department of Insurance and say, ‘We’re overexposed here, you have to let us catch up our [rates].’… He’ll say ‘Nah.’ And we’ll say, ‘OK, then we are going to cancel these policies.'” Kirkpatrick also expressed his belief that houses should not be built in high-risk areas like the Pacific Palisades, citing the inherent fire dangers present in such locations.
State Farm’s Request for a 22% Homeowner Insurance Premium Hike
State Farm General, California’s leading home insurer, recently filed for an emergency 22% rate hike for its homeowner policies following the devastating wildfires in the region. The company cited a significant drop in its surplus account over the past decade, totaling a staggering £3.86 billion ($5 billion). State Farm General claimed that for every £0.77 ($1) in premium collected, it had paid out £0.97 ($1.26), leaving only £773.26 million ($1 billion) in reserves to handle another catastrophic event.
In a meeting with Insurance Commissioner Ricardo Lara, a State Farm executive emphasized that if the rate hikes were not approved, the company might be forced to take undesirable measures to mitigate financial risks. State Farm estimated that the recent California fires could result in losses of approximately £5.87 billion ($7.6 billion), with net losses nearing £463.95 million ($600 million) even after factoring in reinsurance. As of February 25th, the insurer had already paid out £1.35 billion ($1.75 billion) for 9,500 claims.
Kirkpatrick’s Claims and State Farm’s Response
In response to the video’s release and subsequent public outcry, State Farm swiftly distanced itself from Kirkpatrick, asserting that his statements did not align with the company’s values or views. The insurer emphasized that Kirkpatrick was not involved in any business decisions related to State Farm General or its California operations, including rate applications or emergency rate requests.
Kirkpatrick, on the other hand, maintains that the recording was a setup and alleges that his termination was unjust. The former vice president, who specialized in the insurer’s innovation and venture capital sector, insists that his remarks were taken out of context and that his intentions were misconstrued. However, the LA Times reported that Kirkpatrick’s termination was directly linked to the controversial recording released by O’Keefe Media Group.
Consumer Watchdog, an advocacy group based in Los Angeles, called upon Insurance Commissioner Ricardo Lara to investigate Kirkpatrick’s statements further. The group expressed concerns that State Farm’s actions may not solely be driven by financial risk but could potentially involve leveraging policy cancellations as a means to pressure regulatory bodies for rate increases.
In light of these developments, the insurance industry faces increased scrutiny and public skepticism regarding its practices in response to natural disasters. The case involving Kirkpatrick and State Farm serves as a stark reminder of the delicate balance between financial sustainability and ethical responsibility within the insurance sector. As stakeholders await further investigations and regulatory actions, the fallout from this incident underscores the need for transparency and accountability in safeguarding consumer interests and upholding industry standards.
