State Farm Stops Underwriting Mississippi Commerical And Homeowners Policies

This story about State Farm pulling out of Mississippi in the wake of big payouts and a high profile court loss is not much of a surprise, frankly, and I suppose the only reason it didn’t pull out  the Florida market years ago is that it has a state subsidiary there that insulates the capital of the rest of the company.   Most of the story is OK, but a couple parts sound like they were written by Ralph Nader’s evil twin.  Look at this remarkable paragraph:

The industry’s performance in the wake of Katrina and other hurricanes, and the use of hurricane payouts as an excuse to jack up premiums and stop doing business in some areas has drawn fire from consumer groups.

"Use of hurricane payouts as an excuse to jack up premiums?"  Let’s all just try to calm down here and look at one fact: homeowners insurance is a commodity, not a public good.  One does not have the right to have any given company sell you insurance.  If I lose money selling something, I’m either going to raise the price or stop selling it.  If conditions aren’t right for a company — and State Farm said the decision that their policy language was not enforceable in Mississippi was a factor — then they don’t want to write business in that place.  What’s the problem with that?  If in fact, as some consumer advocates say in the story, State Farm is doing this out of spite, if there really is profit to be made, they are just spiting themselves, because other companies will rush in to get in on the sales. 

6 Comments

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6 Responses to State Farm Stops Underwriting Mississippi Commerical And Homeowners Policies

  1. scott s

    Not really surprised given the recent developments down there. Its been awhile since I have heard an update on the Broussard case. Do you know if State Farm is appealing to the 5th circuit for sure, and if so what is the time frame for that appeals process? Will they wait to see the outcome of the Tuepker appeal first?
    Once again, I must say that your coverage of the Katrina developments is second to none. Please keep up the great work.

  2. As for the deadline for appeal, it is 30 days from the entry of a final order in the case. The jury verdict was more than 30 days ago, but after that the judge ordered the punitive damages reducted to $1 million and also had an order cleaning up some procedural matters and denying State Farm’s motion to strike the testimony of the Broussards’ expert. I haven’t given it my full attention, but I believe this means the 30 days has not yet run. The court’s docket shows no entry for a notice of appeal, which would be filed with the court if there was one. They won’t have the option of waiting for the Tuepker appeal, getting a decision on that could take as much as two years. In the Ninth Circuit, where I practice, that is the time from the filing of a notice of appeal until an opinion is issued. Thanks for reminding me, I will keep checking the docket on this case.

  3. More on Mississippi insurance and State Farm

    Others have mentioned or anticipated State Farm’s withdrawal from the Mississippi homeowners’ and commercial insurance markets in the wake of the Jim Hood/Dickie Scruggs campaign against them (Krauss; Olson; Wallace; Adams; Rossmiller). But how many ti…

  4. State Farm withdraws from Mississippi

    Others have mentioned or anticipated State Farm’s withdrawal from the Mississippi homeowners’ and commercial insurance markets in the wake of the Jim Hood/Dickie Scruggs campaign against them (Krauss; Olson; Wallace; Adams; Rossmiller). But how many…

  5. jmac

    I have frequented your site often and have found it to be very informative as I have a large stake in what happens in MS. Last I heard, the “Tupeker” case has been heard…has any ruling been made? If not, why not? What might the time frame be?

  6. JMac, the Tuepker oral argument was, I think, without looking it up, in early September. It takes some time for appeals courts to do their thing, but the Fifth Circuit has been whipping through these Katrina cases at a fast clip. It could be any time now that the Fifth Circuit hands down a decision in Tuepker.