BLOOMINGTON, Ill. -- Some 4.4 million customers of State Farm Insurance will share in a $200 million settlement of a lawsuit accusing the company of fraudulent practices.
The settlement, reached Friday, involves current and former owners of whole life and universal policies issued between January 1982 and December 1997.
The lawsuit accused the company of encouraging policyholders to switch to new policies in which they lost value but were led to believe it was in their best interest. Lawyers say customers were also promised returns based on assumptions the company knew to be unrealistic, such as double-digit interest rates, and were given artificially inflated dividend projections.
The Bloomington-based company denied any wrongdoing, saying it agreed to settle the class-action lawsuit to avoid a protracted court battle. State Farm said the policies indicated that rates were not guaranteed.
Notices will be sent next month explaining how policyholders can go about getting their part of the settlement.