Mississippi Regulator Reaches Agreements with State Farm, Allstate

August 22, 2008

After months of separate discussion and negotiations, State Farm and Allstate insurance companies reached an agreement with Mississippi Insurance Commissioner Mike Chaney on details of homeowners insurance rate filings.

Allstate Property and Casualty Co. will see a statewide average increase of 13.9 percent on policies with wind and hail coverage effective Sept. 22 on new business and Nov. 6 for renewals.

Allstate Insurance Co.’s statewide average increase will be 14.1 percent on policies with wind and hail coverage effective Sept. 22 on new business and Nov. 6 for renewals.

Mississippi Insurance Department granted State Farm, which made its initial filing in 2006, a statewide average increase of 13.6 percent that will go into effect Nov. 1 for new business and Dec. 1 for renewals.

Coastal policyholders with Allstate who do not have wind coverage will see no increase. If Allstate policyholders have wind and hail coverage they will see a variety of changes in their premiums. Seventy-nine per cent of Allstate policyholders on the coast will see up to 40 percent increase in their premiums. Away from the coast over 90 percent of the policy holders for both Allstate Property and Casualty and Allstate Insurance Companies will see up to 5 percent rate increase. MID is also working with Allstate on providing Wind Mitigation discounts.

Allstate’s original filing requested up to a 309 percent increase for some policyholders in the highest risk areas and a statewide average increase of 29 percent. Chaney refused that request.

State Farm’s original filing included withdrawing coverage from additional markets that would have affected nearly 32,000 homes. Now, coastal State Farm policyholders who do not have wind coverage will see no increase while most who still have wind coverage could see anywhere from 10 percent decreases to 20 percent increases in their premiums depending on their location, deductibles and type of dwelling they own.

State Farm policyholders away from the coast could experience 3 percent rate decrease to a 6 percent rate increase. State Farm will also be changing some policyholders to a mandatory hurricane deductible for wind damage.

All companies made significant changes following separate negotiations with the Mississippi Insurance Department. In negotiations both Allstate and State Farm advised MID that if they did not get the required rates that they would have to look at reducing more coastal business. Both companies agreed to work with MID officials to maintain coverage on the coast and other parts of the state. As an example State Farm agreed to begin writing coverage to existing customers who move to the state.

Without these agreements as much as $5 billion of wind coverage would have been put into the state-run Wind Pool which would have cost the state in excess of an estimated $200 million in state revenue yearly to keep rates at present levels.

“Our goal has been to keep people from going into the Wind Pool to save policyholders and taxpayers money,” Chaney said. “I’m a homeowner in Mississippi too and I don’t like to see any increases in insurance premiums. Some rate increases must be granted to keep companies doing business in the state.

Policyholders may check and see how premiums in their area are affected by the filing. The Mississippi Insurance Department will be posting maps of rate changes associated with this filing on its Web site, www.mid.state.ms.us.

Source: Mississippi Insurance Department

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