State Farm Insurance has pulled outto stop writing new policies in Mississippi…
State Farm Insurance Cos. is suspending sales of any new commercial or
homeowner policies in Mississippi effective Friday, citing in part a
wave of litigation it has faced after Hurricane Katrina, a company
official said Wednesday.
John at Americablog asks…“Wow, is that because State Farm doesn’t like black people, or southern people?”
I don’t think this has anything to do with race nor the South other than the coastal south. This is about insurance companies limiting risks, reacting to lawsuits and perhaps sending a message to state legislatures contemplating insurance reforms.
Insurance companies are limiting risks in coastal areas be it the southern Gulf Coast or the East Coast. Read this LA Times article for more info. And an example of this would be All State Insurance which recently stoppedwriting new policies in New Jersey.
I
don’t think it a coincidence that State Farm’s decision follows on the
heels of their settlement of a lawsuit brought by policyholders which
also included a deal that the state would drop a civil suitand
end their criminal investigation of State Farm. The state played
a bit of hardball with State Farm and I don’t think they care for that treatment.
At
present officials in Louisiana have been threatening to institute
insurance reforms such as Florida has done. A dance is ongoing between Gov. Blanco and insurers. She is wooing insurance companies but also using the leverage
of insurance reform. From a meeting today between Blanco and insurance professionals is this…
If private insurance continue to underpay claims,
gouge prices and pull out of the market, the state is left with no
choice but to compete with the private sector, she said.
Blanco
stopped short of calling for reforms as Florida instituted but it seems
she’s holding that threat out there. Of course the insurance companies
have their own err threats dance steps…
Louisiana property owners would be hurt if this state’s legislators
follow the example of those in Florida and approve pro-consumer
insurance reforms, insurance and business officials say. (Go here for more)
It
will be interesting to see how this plays out. I suspect as long as
insurance companies remain LA officials will do little. They probably
would be hesitant to legislate too many reforms that may give insurers a reason
to leave and there is probably no stomach to take on the risk as
Florida has done. Seems to be a cat and mouse game with the
insurers as the cat though.
At any rate I think State Farm’s decision to pull out of MS was due
to not wanting to assume coastal risk and the lawsuits but I wonder
if there also was a message in there for Louisiana officials.