State Farm recently filed a lawsuit in Florida arguing against the state Office of Insurance Regulation’s (OIR) requests for public record information required by the state. Many of the records involved assignment of benefits (AOB) and insurance claims.
State Farm had asked a judge to prevent the release. The insurer cited a trade secret umbrella, as the reason. All trade secrets are considered confidential and by law are not required to be revealed.
“[The] data, in providing claim-level data broken down by ZIP code, would allow an insurer to identify AOB ‘hot spots’ in Florida that could then be used to tailor underwriting decisions in those areas,” according to a section in the lawsuit. According to the lawsuit, State Farm claimed the company could potentially be affected if its information was made available.
AOB’s are common. The overall process involves insured policyholders to sign over his or her benefits to contracted workers, such as auto glass companies, doing the repair. The company is then responsible for getting compensated from the customer’s insurance provider. Although this process is legal, it can be susceptible to problems.
“Another carrier could use State Farm’s data in conjunction with, or in lieu of, its own to evaluate where to write or not write insurance policies in such areas,” according to the lawsuit.