State Farm backs off water, blows off wind – call it a Jaquith move

Here’s Anita Lee on top of another breaking insurance story – this one about State Farm’s decision to back off the water and blow off wind coverage, too.

State Farm Fire & Casualty Co. has decided not to renew property insurance policies for Coast residents who live within 1,000 feet of the Mississippi Sound.

Also, wind coverage will no longer be included in homeowner’s policies for existing customers who are 1,000 feet to 2,500 feet from the water.

State Farm would not confirm the decision Wednesday afternoon. Public officials informed of the news by Mississippi Insurance Commissioner Mike Chaney confirmed to the Sun Herald that the company was State Farm.

Moves like this are a reminder of the days when W.L. Jaquith ruled mental health in Mississippi. Any time Jake couldn’t get what he wanted at the Capitol, he’d start calling families to come pick up patients and boy would they ever kick up a fuss – and, if calls didn’t kick it up enough, he put a few on the bus.

This is Chaney’s biggest test yet; but, you’ve got to hand it to him, the man knows how to recognize a Jaquith move and what to do when he sees one.

“We’ve had many very productive meetings with other carriers and we are very confident that those homeowners who are not renewed will be able to get coverage,” Chaney said. “It may not be at the best price, but they will be able to get coverage.”

The Sun Herald could not get Chaney to confirm the name of the backing-off, blowing-off company he discussed with public officials but he did explain what would be taking place.

Chaney’s office was able to win a couple of concessions, he said: Non-renewals will begin only after hurricane season ends Nov. 30 and withdrawal of coverage will effect fewer residents than originally planned.

The proposal initially called for dropping about 20,000 policies, but that has been pared to 1,100 policies to be cancelled completely. Wind coverage will be dropped from 5,000 or more policies, Chaney said.

Wonder if any of those other carriers offer auto insurance, too.

3 thoughts on “State Farm backs off water, blows off wind – call it a Jaquith move”

  1. I am surprised they have that many policies that close to the water to begin with. It is also not surprising those within 2500 hundred feet will have the wind excluded. The carrier I worked for was not writing south of the railroad tracks over thirty years ago.

    That being said I am sure there will be some carriers who will write this coverage. It will not be cheap, but the costs will reflect the exposure to loss. These will most likely be non-admitted, excess and surplus carriers. That is just the coastal marketplace of today.

  2. I can’t understand why State Farm doesn’t want to cover wind on the Coast! After all, there wasn’t any wind damage down there after Katrina, was there? “/snark”

  3. Belle IMHO we are a better overall wind risk than the central and northern portions of the state that deal with ice storms and tornados.

    My best guess is that the big problems in the coastal market are event severity and scope compared to the market size. The market size problem is self inflicted in that “the markets” are artificially fragmented with the current state by state setup for insurance. The McCarron-Fergueson anti trust exemption allows insurers to exploit the fragmented demand side of the insurance market while insurers, as the product suppliers are an effective oligopoly.

    The sheer number of years that Ms Supslaemgr correctly points out ALL and State Farm have dominated the retail marketplace for Auto and Home insurance leads me to the conclusion that the often repeated industry line that McCarron-Fergueson actually helps smaller insurance companies is pure myth. Is there also generational familial dominance at State Farm and AIG/Marsh/ACE that is reminiscent of certain trusts busted by TR back in the robber barron days of yore? Absolutely yes.


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