Industry analysts are predicting a backlash against the insurance industry as a whole as a result of last week’s announcement by State Farm that it is suspending sales of any new commercial or homeowners’ policies in Mississippi. One possibility is that it will spur Congress to consider a federal catastrophe fund. Karen Pauli, senior analyst with Needham, Mass.-based TowerGroup, told the National Underwriter that Hurricane Katrina engendered a spirit of collaboration and creative problem-solving between government, consumers and insurance carriers, which faded during the relatively catastrophe-free 2006. “We believe this has resulted in a return by many state officials to their prior contentious relationships with insurers, which in turn has caused a carrier backlash in which they are taking aggressive measures to manage enterprise risk exposure,” she added.

Other analysts say last week’s introduction of a bill in the Senate repealing the antitrust exemption for the insurance industry is an example of the kind of backlash that could be expected in the wake of carriers cutting back on their exposure in catastrophe-prone areas.

State Farm Backlash Predicted (National Underwriter 2/19/06)

February 21, 2007