State Farm unveils policy change
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.
To sign up for Mississippi Business Daily Updates, click here.
Top Posts & Pages
- Host families prepare for Mississippi Braves’ season
- Ridgeland property rights tussle is expected to have wide impact
- JOSH MABUS — Mississippi’s Healthcare: Not a quality problem, a marketing problem
- Mississippi takes an incentives licking, keeps on ticking
- Investors in Northbrook complex say Ridgeland targeting its own collateral for demolition
- HUNTER ARNOLD: Mississippi, Gulf Coast states focus on global business markets
- AWAITING ITS FATE: Gables complex may have to shrink to meet law
- PHIL HARDWICK: When will Mississippi change its culture?
- Mississippi furniture makers on rebound with more exports