Uncertainty in State Legal and Business Environments Cited as Reason -
JACKSON, MS – Feb. 14, 2007 – Citing uncertainties in the Mississippi legal and business environments, State Farm Senior Vice President Bob Trippel yesterday advised Mississippi’s Commissioner of Insurance George Dale that State Farm Fire and Casualty Company will suspend writing new homeowners and commercial property insurance in the state of Mississippi.
“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,” said Trippel.
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% 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,” he said.
The company stated that criticisms about how it handled Hurricane Katrina claims have complicated matters. The company is concerned that provisions in its 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 two percent of all State Farm claims associated with Hurricane Katrina have not been settled.
About State Farm
State Farm® is the largest retail insurer in Mississippi. It insures more cars than any other insurer in North America and is the leading U.S. home insurer. State Farm’s 17,000 agents and 68,000 employees serve over 74 million auto, fire, life and health policies in the United States and Canada, and more than 1.8 million bank accounts. State Farm Mutual Automobile Insurance Company is the parent of the State Farm family of companies. State Farm is ranked No. 22 on the Fortune 500 list of largest companies.