JACKSON — State Farm gave consumers one part of its policy change when it announced eight months ago it would resume issuing insurance policies in the state.
What the company didn’t say is it is writing policies on a lose-one, write-one basis. So it will write a new homeowner’s policy only if another of its policies is canceled.
“There is not unlimited growth. There is managed growth,” State Farm spokesman Roszell Gadson said.
“This is all part of managing our growth and making sure that we’re able to take care of all the risk that we take on in case there is a catastrophe,” Gadson said.
Mississippi Insurance Commissioner Mike Chaney said he allowed the carrier to add new customers in this manner because it wasn’t writing polices in the state at all. Chaney said his office approved a rate increase for the insurer only after it agreed to issue polices in the state.
State Farm stopped issuing polices in 2007, as it weathered Hurricane Katrina-related claims and lawsuits.
The company has more than 150,000 homeowner policies in Mississippi, according to the state Insurance Department. The company receives about $400 million in premiums for all types of policies in Mississippi.
An approved rate increase — an average of 3.9 percent across the state — took effect on Aug. 1.
The insurer still isn’t writing policies in the state’s three coastal counties.
It’s unclear if State Farm is using a similar policy in other states, but Gadson insists the company is managing its growth in other states.
The company last month announced plans to cancel the homeowner policies of 125,000 Florida customers. The company attributed the cancellations to the state’s refusal to approve a 47.1 percent rate increase. State Farm will continue to offer auto, life and health coverage in Florida.
With the lose-one, write-one policy, agents are only allowed to have a certain number of policies. If that agent drops below that number — loses a customer — then he or she can write a new policy to replace the lost business.
Since the policy began, Gadson said, State Farm has written “thousands” of policies, although he was unsure exactly how many have been written.
If a customer goes to an agent who cannot write a new homeowner policy, he said, the person will be referred to another agent.
State Farm is also issuing policies to State Farm customers who move from other states.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info