This is amazing- State Farm is no longer going to write new policies in MS…I see great opportunity here. MS Attorney General declares State Farm is making profit and now leaving state. I now to start Chad Balaamaba Mutual Insurance. I will use State Farm ratings and make a bundle. Why would State Farm be so silly to leave such a profitable market? It just doesn\’t make sense; it\’s kind of like providing flood coverage on policies that don\’t have flood coverage; that don\’t make sense, either. I\’ll be sure to put an extra big, easy to read, super-duper flood exclusion in my policy, so that way no one can say they didn\’t see it. I may even call it \”The Chad Balaamaba No Flood, water or any wet damage homeowners policy\”.
Dan and Jim please try to get it right. I keep thinking State Farm has a problem in Michigan. If you cannot get something like that right I question the intelligence of your opinion. Too much market share in any area can be a bad thing. That is the reason they spread the risk.
My opinion….Its wrong to reinterpret a policy after the fact. State Farm did not collect premium to cover flood. They should think about not agreeing to write a homeowners policy unless the customer also buys a flood policy and keeps it in force. I am an independent agent and some of my companies will not write your homeowners unless you also purchase car insurance from them. This stance would make it simple for any company. Buy the coverage you need or buy nothing from us. This would solve a lot of their problems in the gulf coast states. Most of those people knew that flood insurance was available but opted not to purchase it. I say force it on them or send them packing. If the flood policy were written through State Farm then it would be easy to track.
New homeowners policy = Must have flood policy
Flood policy cancels = Homeowners policy non-renewed
I know I am thinking out of the box here and the state may not allow but they should because the flood insurance program exists exactly for this exposure. If you have both there is no question of coverage for these claims. It is covered by one, the other, or both. If you live in a gulf state or a flood zone you need it. This would probably make the Flood Program Work better too with more money to pay the claims when they come and we all know they will again.
I\’ve said this before in one of these blogs.
In the early 1970s the insurance agents in North Texas offered to put together an insurance course for high schoolers. We would supply the instructors and information and guaranty no company specific info or promotions. It would be basics of the way insurance works.
Administrators were less interested that a kid being offered brussels sprouts.
Seems most people would rather find out about insurance after they have a loss or a problem with the insurance they have.
I have been following this story and thought I would share some observations:
1) The insurance industry is highly regulated by state and federal governments. Unlike most businesses, insurance companies must prove the price they want to charge is fair and adequate. Even when they do that, state departments of insurance (DOI) often won\’t allow them to charge what is actuarially fair. I can see regulating industries where sole providers exist such as electric or natural gas companies (if you don\’t like the company, you can\’t switch). But with insurance, there are hundreds of companies available (well, not for long in MS, just ask FL). If you don\’t like State Farm or Allstate, there are other companies (well, there were). Why the DOI\’s over regulate this industry is beyond me. Any business owner out there should cringe at the thought that in a free market, someone has the right to tell them what they can and can\’t charge for their products or services or where they can and can\’t do business.
2) I\’m guessing SF lost money in MS last year after paying out over $1B. The articles state the $3.9 billion profit was a countrywide figure. Again, the insurance industry is highly regulated and most states have laws that do not allow insurance companies to charge policyholders in other states more for insurance to subsidize unprofitable states. States must stand on their own. Much of the profit goes to surplus coffers to pay for future catastrophes or is shared back in the form of rate reductions. If you read the news, the current competitive climate for insurance is fierce. Most states are seeing rate reductions in 2007 due to a profitable 2006 industry-wide. Again, states with lesser risk cannot legally subsidize those with higher risk.
3) If SF is such an bad company and according to AG Hood is trying to \”nickel and dime everyone\”, then why is he trying so hard to force them to keep writing insurance in the state of MS. You would think he would be relieved that the evil insurance company can no longer harm any more of his precious constituents. The truth is that he knows he\’s created a mess and now has limited his options. If the business climate in MS is so good, then there would be many insurance companies wanting to \”take\” SF\’s business it will be turning away. Sadly, more insurers will follow suit because of Hood and the courts decisions and supply and demand will take over. The good people of MS need to realize for the few thousand people AG Hood forces payments for, it\’s the millions of others he really ends up hurting in the long run.
I couldn\’t agree with you more. I think if you own a house, you should get coverage for all perils, even if you don\’t live in an area prone to that loss.
Although, I\’ve read several posts on this topic, and I haven\’t seen a definitive answer on whether State Farm is responsible for the wind damage if flood damage also occurred. There seems to be some debate because of that clause (can\’t remember the name just now). I\’m a commercial underwriter, so I don\’t get involved with HO policies, and my area is not property.
How the world works. August 18,2005 The Illinois Supreme Court Docket No 91494 Class action Aginst State Farm A total award of $1,186,180,000 Reducing the award to $ 1,056,180,000. You need more? Melanie
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In agreement with you (and Hal & William). Good for State Farm dfor leaving MI. I hope that other carriers leave the state as well.
This is amazing- State Farm is no longer going to write new policies in MS…I see great opportunity here. MS Attorney General declares State Farm is making profit and now leaving state. I now to start Chad Balaamaba Mutual Insurance. I will use State Farm ratings and make a bundle. Why would State Farm be so silly to leave such a profitable market? It just doesn\’t make sense; it\’s kind of like providing flood coverage on policies that don\’t have flood coverage; that don\’t make sense, either. I\’ll be sure to put an extra big, easy to read, super-duper flood exclusion in my policy, so that way no one can say they didn\’t see it. I may even call it \”The Chad Balaamaba No Flood, water or any wet damage homeowners policy\”.
Dan and Jim please try to get it right. I keep thinking State Farm has a problem in Michigan. If you cannot get something like that right I question the intelligence of your opinion. Too much market share in any area can be a bad thing. That is the reason they spread the risk.
My opinion….Its wrong to reinterpret a policy after the fact. State Farm did not collect premium to cover flood. They should think about not agreeing to write a homeowners policy unless the customer also buys a flood policy and keeps it in force. I am an independent agent and some of my companies will not write your homeowners unless you also purchase car insurance from them. This stance would make it simple for any company. Buy the coverage you need or buy nothing from us. This would solve a lot of their problems in the gulf coast states. Most of those people knew that flood insurance was available but opted not to purchase it. I say force it on them or send them packing. If the flood policy were written through State Farm then it would be easy to track.
New homeowners policy = Must have flood policy
Flood policy cancels = Homeowners policy non-renewed
I know I am thinking out of the box here and the state may not allow but they should because the flood insurance program exists exactly for this exposure. If you have both there is no question of coverage for these claims. It is covered by one, the other, or both. If you live in a gulf state or a flood zone you need it. This would probably make the Flood Program Work better too with more money to pay the claims when they come and we all know they will again.
I\’ve said this before in one of these blogs.
In the early 1970s the insurance agents in North Texas offered to put together an insurance course for high schoolers. We would supply the instructors and information and guaranty no company specific info or promotions. It would be basics of the way insurance works.
Administrators were less interested that a kid being offered brussels sprouts.
Seems most people would rather find out about insurance after they have a loss or a problem with the insurance they have.
Chad,
Maybe I read this article wrong, but the quote about State Farm earning a profit came from a State Farm spokesman not the MS AG.
I have been following this story and thought I would share some observations:
1) The insurance industry is highly regulated by state and federal governments. Unlike most businesses, insurance companies must prove the price they want to charge is fair and adequate. Even when they do that, state departments of insurance (DOI) often won\’t allow them to charge what is actuarially fair. I can see regulating industries where sole providers exist such as electric or natural gas companies (if you don\’t like the company, you can\’t switch). But with insurance, there are hundreds of companies available (well, not for long in MS, just ask FL). If you don\’t like State Farm or Allstate, there are other companies (well, there were). Why the DOI\’s over regulate this industry is beyond me. Any business owner out there should cringe at the thought that in a free market, someone has the right to tell them what they can and can\’t charge for their products or services or where they can and can\’t do business.
2) I\’m guessing SF lost money in MS last year after paying out over $1B. The articles state the $3.9 billion profit was a countrywide figure. Again, the insurance industry is highly regulated and most states have laws that do not allow insurance companies to charge policyholders in other states more for insurance to subsidize unprofitable states. States must stand on their own. Much of the profit goes to surplus coffers to pay for future catastrophes or is shared back in the form of rate reductions. If you read the news, the current competitive climate for insurance is fierce. Most states are seeing rate reductions in 2007 due to a profitable 2006 industry-wide. Again, states with lesser risk cannot legally subsidize those with higher risk.
3) If SF is such an bad company and according to AG Hood is trying to \”nickel and dime everyone\”, then why is he trying so hard to force them to keep writing insurance in the state of MS. You would think he would be relieved that the evil insurance company can no longer harm any more of his precious constituents. The truth is that he knows he\’s created a mess and now has limited his options. If the business climate in MS is so good, then there would be many insurance companies wanting to \”take\” SF\’s business it will be turning away. Sadly, more insurers will follow suit because of Hood and the courts decisions and supply and demand will take over. The good people of MS need to realize for the few thousand people AG Hood forces payments for, it\’s the millions of others he really ends up hurting in the long run.
Ralph,
I couldn\’t agree with you more. I think if you own a house, you should get coverage for all perils, even if you don\’t live in an area prone to that loss.
Although, I\’ve read several posts on this topic, and I haven\’t seen a definitive answer on whether State Farm is responsible for the wind damage if flood damage also occurred. There seems to be some debate because of that clause (can\’t remember the name just now). I\’m a commercial underwriter, so I don\’t get involved with HO policies, and my area is not property.
How the world works. August 18,2005 The Illinois Supreme Court Docket No 91494 Class action Aginst State Farm A total award of $1,186,180,000 Reducing the award to $ 1,056,180,000. You need more? Melanie
You get the Gold Star. Good for you. Say no more to FRAUD. Melanie
State Farm money,s the only thing. History repeats itself. Oklahoma 1999 . You Need More? Melanie