Beginning in mid-February, State Farm Fire & Casualty Co. will raise homeowner insurance rates 19.5 percent in the three Coast counties…Allstate is requesting a 65 percent rate hike statewide.
Anita Lee has the story on rising insurance rates for the Sun Herald.
Insurance Commissioner Mike Chaney approved the rate increase, rejecting State Farm’s request for a 45 percent rate hike along the Coast. New rates will apply only for current policyholders because State Farm is writing no new business in the three Coast counties…The Mississippi Insurance Department has asked for additional information from Allstate in reviewing the rate proposal. Chaney’s office did the same with State Farm before agreeing to the lower increase.
State Farm already had raised rates in the rest of Mississippi by 3.9 percent.
In 2008, the company stopped offering wind coverage to customers who live within 2,500 feet of the Mississippi Sound or bays that spill into it. Company spokesman David Majors said Monday that State Farm has decided to drop wind coverage on an additional 1,800 policies in surge-prone areas.
What a game plan!
“State Farm is disappointed that we were unable to achieve rate adequacy in the Coastal areas and that Commissioner Chaney was unwilling to allow us to implement our needed rate,” [State Farm spokesman David] Majors said. “This rate change will provide us the ability to more appropriately balance the risk with insuring our ability to continue to serve our policyholders along the Gulf Coast and throughout Mississippi.”
Chaney said in the news release: “I want to emphasize that the department has no legal authority to prevent termination of wind coverage by companies.
“Since State Farm did not get the full, requested rate increase, I have very grave concerns that State Farm may review wind coverage and non-renew or terminate existing wind coverage, which may force some consumers into the state-run wind pool.
State Farm, of course, makes money from the wind pool as well as from providing direct coverage. Allstate, too.
Why doesn’t State Farm make public their estimates of losses on the MS Coast and their reinsurance costs (to unaffiliated reinsurers) attributable to MS Coast exposure and then show us the math that says that 19.5 percent higher premiums on cherry-picked properties will not cover those costs.
Private markets work only when there is consumer choice, transparency, protection from conflicts of interest, and protection from fraud. We have none of those in the insurance market so it is not really a market.
No its not a market – it’s a game!