State Farm Says It Warned U.S. Officials About Toyota Accident Trend in 2007

February 8, 2010

Private insurer State Farm informed a U.S. government regulator of a worrying trend of vehicle-caused accidents involving Toyota Motor Corp. as far back as late 2007, an official at the company said.

“When you start to see significant claims activity that indicates that there may be widespread problems with a product, that’s when you go to the NHTSA,” said company spokesman Kip Diggs. “There had to have been significant activity, a noticeable trend, for that to happen.”

Bloomington, Illinois-based State Farm is America’s largest auto insurer, with 42.4 million auto insurance policies. That gives it a U.S. market share of roughly 18 percent, according to industry trade association, the Insurance Information Institute.

Diggs said the company contacted the National Highway Traffic Safety Administration in “late 2007” and had been in touch with the regulator an unspecified number of times since then.

Toyota has been hit by an embarrassing recall of more than 8 million vehicles worldwide, which has raised questions about the quality standards and credibility of the Japanese automaker.

Diggs said that the models involved in the incidents State Farm had brought to the attention of the NHTSA were “consistent with the voluntary recall undertaken by Toyota.”

Other insurers said they had not seen such a trend.

“We have not seen such a pattern,” said Steve Witmer, a spokesman for Madison, Wisconsin-based American Family Insurance Group, the No. 10 U.S. auto insurer with a market share of 2.1 percent.

However, Insurance Information Institute President Bob Hartwig said that few insurers beyond State Farm had a big enough auto insurance business to determine a trend like this.

He added that State Farm’s insurance data had also been critical in tracking problems with tires made by Bridgestone Corp. unit Firestone to rollover incidents involving U.S. automaker Ford Motor Co’s Explorer models a decade ago.

“State Farm helped crack the problem with Firestone tires and few other (auto) insurers have the scale to do what they can,” Hartwig said.

But other insurers are apparently going back over accidents involving Toyota models to determine whether they may have been caused by a vehicle fault instead of the driver.

“We’re currently reviewing claims that may be affected by the Toyota recalls,” said Leah Knapp, a spokeswoman for No. 4 U.S. auto insurer Progressive. “Right now it’s too soon to say how many customers may be affected, but at this point there’s no indication that it will be a significant number.”

(Reporting by Nick Carey, editing by Matthew Lewis)

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