State Farm Insurance Companies announced last week that it is suspending sales of any new commercial or homeowners’ policies in the state, effective February 16. State Farm Senior Vice President Bob Trippel said the company took the action because of the increasingly unpredictable business and legal environment in the state. “We’re just not in a position to accept any additional risk in this homeowners’ market,” he said in a statement.

During a press conference on Friday February 16, Mississippi Attorney General Jim Hood said he will seek legislation aimed at blocking State Farm from refusing to write new homeowners and commercial policies in the hurricane-battered state. He said the plan was modeled after actions taken by Florida and would require any company that writes automobile insurance to write homeowners policies as well. “We’re looking at a robber baron in the face that is trying to make an example of Mississippi,” Hood said of State Farm.

After Hood’s press conference, a State Farm spokesman issued a statement, in part saying, “We feel this is a remarkable response to what was just purely a business decision, but it does underscore the legal and political challenge we face in Mississippi. State Farm is not trying to pick a fight. We are just trying to service our current customers and do not want to accept the additional risks new policies would pose in the current environment.”

The State Farm statement continued, “We didn’t come to our decision this week lightly, and we thought we struck the right balance between serving the interest of our current customers and not taking on additional risks in a state intent on re-writing contracts after the fact. We hope that, over time, the political and legal environment in Mississippi will improve so that we can return to writing new business on the homeowners and commercial side, but today’s action showed just how unpredictable and untenable the current environment in Mississippi can be.”

Miss. Aims to Force State Farm to Write New Policies (Associated Press 2/16/07)
 
Allstate CEO Says His Company Paid Katrina Claims of Type State Farm Denied (Insurance Journal 2/15/07)

February 21, 2007