[StBernard] State Farm: No new home policies in Miss.

[Westley Annis]

And as I wrote on nola.com, they should be disallowed from writing ANY
insurance policies in MS to include auto.  I also wonder about the $1
billion dollar figure State Farm cites.  Was that including flood payments?

 
Let's see:  they are taken to court and agree out of court to settle $80
million on homeowners, they made in the BILLIONS in profits and they still
kevetch?  N O  W A Y
 
JLY


 

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	State Farm: No new home policies in Miss. 
	Insurer to also stop writing commercial coverage amid Katrina
litigation
	MSNBC staff and news service reports
	Updated: 3:39 p.m. CT Feb 14, 2007
	
	State Farm Insurance Cos. is suspending sales of any new commercial
or
	homeowner policies in Mississippi starting Friday, citing in part a
wave of
	litigation it has faced since Hurricane Katrina, a company official
said
	Wednesday.
	
	Mike Fernandez, vice president of public affairs for State Farm,
said
	Mississippi's "current legal and political environment is simply
untenable.
	We're just not in a position to accept any additional risk in this
	homeowners' market."
	
	Fernandez said the decision does not affect existing policies but
the
	company is still assessing how many of the current policies in
Mississippi
	will be renewed this year.
	
	Fernandez said the action was not a direct response to any specific
	development in the litigation. That litigation has included a recent
federal
	jury's $2.5 million punitive damage award to a couple who sued State
Farm
	for refusing to cover the 2005 hurricane's storm surge damage to
their
	Biloxi home.
	
	U.S. District Judge L.T. Senter Jr. later reduced the award to $1
million,
	even though Senter said State Farm acted in a "grossly negligent
way" by
	denying the claim filed by policyholders Norman and Genevieve
Broussard.
	
	"I view this decision as the inevitable outcome of the increased
uncertainty
	and cost associated with the litigation that has developed
post-Katrina,"
	said Robert Hartwig, vice president and chief economist for the
Insurance
	Information Institute in New York, an industry-funded group.
	
	The state's courts and some state officials have created a
"virtually
	impossible working environment for insurers," he said.
	
	Like the rest of the insurance industry, State Farm has been highly
	profitable over the past few years, despite hurricane payouts. State
Farm
	recorded a net profit of $3.24 billion in 2005 on revenue of about
$60
	billion, down 39 percent from the $5.31 billion in net income for
2004. Last
	fall, Hartwig estimated that the industry would see record profits
of $55
	billion to $60 billion for 2006 when results are available later
this year.
	Even in 2005, the year of Katrina, the industry made $43 billion. 
	
	The industry's performance in the wake of Katrina and other
hurricanes, and
	the use of hurricane payouts as an excuse to jack up premiums and
stop doing
	business in some areas has drawn fire from consumer groups. A report
	released last month by Americans for Insurance Reform blasted the
industry's
	"poor response to Hurricane Katrina" and found "a significant
pattern of
	callousness, unfairness, and generally inept performance by many
companies.
	In some cases, insurers' conduct worsened the suffering of
policyholders,
	many of whom were left hungry and homeless by the hurricane."
	
	"They have overestimated their losses and vastly overpriced," J.
Robert
	Hunter, the director of insurance at the Consumer Federation of
American,
	told the New York Times. 
	
	Mississippi Insurance Commissioner George Dale said State Farm's
decision
	comes at a time in the recovery process when "it is becoming more
vital than
	ever that policyholders in Mississippi have a viable and affordable
	insurance market."
	
	"State Farm's decision is a stark reminder that the issues brought
about by
	Hurricane Katrina affect not only the coast, but policyholders all
across
	the state," Dale said in a statement.
	
	"It is my hope that by continuing to work with State Farm, they will
at some
	time in the future reverse the decision," Dale said.
	
	Bob Trippel, State Farm senior vice president, said in a statement
that the
	company would reassess the situation "when there's more certainty"
in the
	state's business climate.
	
	State Farm, the largest homeowners insurer in Mississippi with more
than 30
	percent of the market, has agreed to settle hundreds of lawsuits by
	policyholders and reopen and pay thousands of other disputed claims.
The
	landmark deal is potentially worth hundreds of millions of dollars
for
	Mississippi homeowners devastated by Katrina.
	
	The company had written roughly 29,000 new homeowner policies in the
	Mississippi in 2006, while other companies were writing a smaller
percentage
	of claims, Fernandez said.
	
	The decision does not impact State Farm's financial services,
banking
	products or automobile coverage in the state. And Fernandez said
Mississippi
	is the only state where his company has suspended writing new
policies.
	
	"The political and regulatory and legal environment in the other two
states
	(hit by Katrina) - Louisiana and Alabama - is not the situation in
	Mississippi," he said.
	
	State Farm and other insurers say their homeowner policies cover
damage from
	wind but not from water - and exclude damage that could have been
caused by
	a combination of both, even if hurricane-force winds preceded a
storm's
	rising water. Hundreds of policyholders have challenged that claim,
saying
	they are entitled to damages from storm surge.
	
	"We don't want to write new policies under a contract that they are
calling
	into question," Fernandez said.
	
	
	The settlement reached last month calls for State Farm to pay about
$80
	million to more than 600 policyholders who sued the company for
refusing to
	cover damage caused by Katrina on Aug. 29, 2005.
	
	Senter later said he would not sign off on part of the agreement, a
deal
	between State Farm and Mississippi Attorney General Jim Hood for at
least
	$50 million in payments to policyholders whose claims were denied
but didn't
	sue the company.
	
	Senter said he doesn't have enough information to determine how many
	policyholders would benefit from the deal or how much each can be
paid.
	
	State Farm said earlier that it already has paid roughly $1.1
billion for
	about 84,000 property claims in Mississippi.