Mississippi Announces New Business Changes

State Farm Fire and Casualty Company has suspended writing new homeowners and commercial property insurance in the state of Mississippi effective February 16, 2007.

We came to this decision reluctantly.  But it is no longer prudent for us to take on additional risk in a legal and business environment that is becoming more unpredictable.  When there’s more certainty, we will reassess the situation.

State Farm actually grew its business in Mississippi in 2006, writing over 29,000 new homeowners policies and more than 76,000 new auto policies.  State Farm currently insures 30.3 percent of the homeowners market in Mississippi (according to 2005 data from A.M. Best).

We will continue to serve our existing policyholders, write new auto insurance policies and market our financial services products as long as market conditions allow, but the current legal and business environments with regard to homeowners and commercial insurance are becoming untenable. 

Criticisms about how we handled Hurricane Katrina claims have complicated matters.  We are concerned that provisions in our insurance policies are being reinterpreted after the fact to provide for coverages that were not contemplated when the policies were written.  To date, State Farm has handled over 84,000 non-auto property claims in Mississippi as a result of Hurricane Katrina, and has already paid in excess of $1 billion in damages, excluding those payments made under the National Flood Insurance Program.  Fewer than 2 percent of all State Farm claims associated with Hurricane Katrina have not been settled.