State Farm Sued Over Policies Backed by Distressed Insurer PHL
December 9, 2025 by Alexandre Rajbhandari
State Farm Mutual Automobile Insurance Co. faces a lawsuit accusing it of fraud and unjust enrichment for selling products from PHL Variable Insurance Co., which authorities say has a $2.2 billion capital shortfall that left policyholders with less-than-promised payouts.
Wink’s Moore on the Market: PHL Variable Insurance Co contract holders are suing State Farm. The company had an arrangement for their agents to be able to sell PHL policies.
Such ventures are relatively commonplace with mutual (career/captive) insurance companies like State Farm, who are often looking to provide their agents with more “competitive” products, via a relationship with a stock held insurer.
Contract holders in this case only received only their guaranty fund coverage amount, and are asking for their full death benefits.
It will be interesting to see if the judge feels that State Farm is liable. This could set precedent for such arrangements in the future.
It just goes to show that any such arrangements need to have DEEP due diligence completed, prior to signing such an agreement. -sjm
