State Farm pulling up stakes in Mississippi

[rajncajn]

State Farm halts new homeowners insurance in Miss

 

NEW YORK (Reuters) - State Farm Mutual Automobile Insurance Co. said it will stop writing new policies for homeowners and businesses in Mississippi following a legal battle over damage claims there from 2005's Hurricane Katrina.

 

"It is no longer prudent for us to take on additional risk in a legal and business environment that is becoming more unpredictable," Bob Trippel, senior vice president of the largest home insurer in the United States, said in a statement on Wednesday.

 

State Farm joins other insurers -- including Allstate Corp., its biggest national competitor -- which are cutting back in coastal areas. Among them are American International Group Inc., the world's largest insurer, and Nationwide Mutual, the parent company of Nationwide Financial Services Inc..

 

One industry expert said the avalanche of legal claims State Farm faced following a controversy over whether homes were devastated by floods, for which they weren't insured, or wind, for which they were, may have been the deciding factor.

 

"Hurricanes can be insured against, but litigation can't," said Robert Hartwig, head of the Insurance Information Institute, which provides insurance statistics. "Those costs are extremely high."

Word of warning to State Farm policyholders. When the **** hits the fan, you better get a good lawyer because they are going to do whatever they can to get out of paying. If State Farm/Allstate etc are pulling out of any higher risk locations then what good are they anyway? All this on top of record profits this year. Edited February 15, 2007 by rajncajn

[Yukon Cornelius]

State Farm halts new homeowners insurance in Miss

 

Word of warning to State Farm policyholders. When the **** hits the fan, you better get a good lawyer because they are going to do whatever they can to get out of paying. If State Farm/Allstate etc are pulling out of any higher risk locations then what good are they anyway? All this on top of record profits this year.

 

yup and there will be more doing the same i bet........ ugly

[Azazello1313]

yup and there will be more doing the same i bet........ ugly

 

 

as it says in the article, others (including allstate) have already done it.

[Bill Swerski]

State Farm halts new homeowners insurance in Miss

 

Word of warning to State Farm policyholders. When the **** hits the fan, you better get a good lawyer because they are going to do whatever they can to get out of paying.

 

Unfortunately, that's typical of almost all insurance companys in this day and age.

[Perchoutofwater]

State Farm halts new homeowners insurance in Miss

If State Farm/Allstate etc are pulling out of any higher risk locations then what good are they anyway? All this on top of record profits this year.

 

 

Sounds like a smart move. They have basically said, that in order to make it profitable, the insurance companies would have to jack the premiums up so high nobody would be able to afford them, so it's not worth it. They have a responsibility to their stockholders. Now you have to ask yourself, if an insurance company thinks it is too risky to take your money, why would should some of these areas be rebuilt with tax dollars?

[MikesVikes]

I was going to post this when I heard it yesterday.

 

I'd hate to be the State Farm agent from Mississippi.

[Azazello1313]

a lot of the background issues were discussed in this thread

 

edit: rajn, you pretty much hit it on the head:

If the insurance companies are made to pay then none of us here on the Coast would likely ever be able to get insurance again. It sucks, but that's the way it is.

Edited February 15, 2007 by Azazello1313

[godtomsatan]

Now you have to ask yourself, if an insurance company thinks it is too risky to take your money, why would should some of these areas be rebuilt with tax dollars?

 

 

Since when do insurance companies dictate public policy?

[Perchoutofwater]

Since when do insurance companies dictate public policy?

 

 

All I'm saying is that if it is too risky for the insurance companies to try to make a profit on it, then there is a good chance that rebuilding efforts are just throwing money into the Gulf of Mexico. I'm sure Juan and Pedro appreciate the money though.

[spain]

Since when do insurance companies dictate public policy?

 

Since the Republicans took over the Oval office in 2000...

[Randall]

Unfortunately, that's typical of almost all insurance companys in this day and age.

 

 

 

Well In florida they stopped writing new flood insurance and the state chipped in. But all policies in the whole state?

[Azazello1313]

Sounds like a smart move. They have basically said, that in order to make it profitable, the insurance companies would have to jack the premiums up so high nobody would be able to afford them, so it's not worth it. They have a responsibility to their stockholders. Now you have to ask yourself, if an insurance company thinks it is too risky to take your money, why would should some of these areas be rebuilt with tax dollars?

 

 

it's not so much that the area presents too much risk....the primary risk is that they'll write a policy insuring against one thing, and some loss-spreading judge will decide later on that it insures against other things as well.

[godtomsatan]

All I'm saying is that if it is too risky for the insurance companies to try to make a profit on it, then there is a good chance that rebuilding efforts are just throwing money into the Gulf of Mexico. I'm sure Juan and Pedro appreciate the money though.

 

 

Don't forget the contractors.

[Sgt. Ryan]

State Farm did this in Texas a couple of years back because of black mold.

[spain]

it's not so much that the area presents too much risk....the primary risk is that they'll write a policy insuring against one thing, and some loss-spreading judge will decide later on that it insures against other things as well.

 

Yes, like when they were insured against flood damage, but the damage was actually you know, caused by a hurricane that caused their house to flood so the insurance company denied their claims...

Edited February 15, 2007 by spain

[Perchoutofwater]

it's not so much that the area presents too much risk....the primary risk is that they'll write a policy insuring against one thing, and some loss-spreading judge will decide later on that it insures against other things as well.

 

 

 

State Farm did this in Texas a couple of years back because of black mold.

 

 

Ok, so we all agree lawyers are evil.

[Azazello1313]

Yes, like when they were insured against flood damage, but the damage was actually you know, caused by a hurricane that caused their house to flood so the insurance company denied their claims...

 

 

no, they're pulling up stakes because some judge essentially re-wrote homeowners policies that specifically EXCLUDED flood coverage so that they covered flood damage.

[wiegie]

Auto insurers play hardball in minor-crash claims

POSTED: 11:23 p.m. EST, February 9, 2007

By Drew Griffin and Kathleen Johnston

CNN

 

ATLANTA, Georgia (CNN) -- If you are injured in a minor car crash, chances are good that you will be in the fight of your life to get the insurance company to pay all the medical costs you incur -- even if the accident was no fault of your own.

 

That's what CNN discovered in an 18-month investigation into minor-impact soft-tissue injury crashes around the country. Those are accidents in which there is little damage to the vehicle and the injuries to people are not easy to see by the naked eye or conventional medical tools like X-rays.

 

Since the mid-1990s, most of the major insurance companies -- led by the two largest, Allstate and State Farm -- have adopted a tough take-it-or-leave-it strategy when dealing with such cases.

 

The result has been billions in profits for insurance companies and little, if anything, for the public, according to University of Nevada insurance law professor Jeff Stempel.

 

"We can see that policyholders individually are getting hurt by being dragged through the court on fender-bender claims, and yet we don't see any collateral benefit in the form of reduced premiums even for the other policyholders," Stempel said.

 

"So I think now we can say to continue this kind of program is in my view institutionalized bad faith."

 

If you have never heard of the strategy, it's because insurance companies don't want you to know that they are paying out less and less for minor crashes even while their profits soar and your premiums continue to rise.

 

But after a review of more than 6,000 company documents and court records, interviews with a dozen people nationwide, including former company insiders, and conversations with accident victims, the picture is clear: If you challenge the offer by some insurance companies you will be left with no option but to go to court, where you will be dragged through the wringer.

 

Expensive, time-consuming

In an affidavit in a New Mexico case where Allstate is being sued, one of the company's former attorneys said the strategy is to make fighting the company "so expensive and so time-consuming that lawyers would start refusing to help clients."

 

Shannon Kmatz, a police officer and former Allstate claims agent, said company employees were encouraged to get rid of claims quickly and cheaply and even offered accident victims as little as $50, telling them to take it or leave it.

 

Both Roxanne Martinez of Santa Fe, New Mexico, and Ann Taylor of West Lafayette, Indiana, saw the practice firsthand.

 

Martinez suffered neck and back injuries when she was sideswiped by a driver insured by Allstate.

 

After three years, the company finally offered her $15,000 -- a little more than half of what she needed for lost wages and medical bills.

 

She went to court, and four years after the accident a jury awarded her $167,000 plus interest.

 

"It's kind of hard when you are thinking they are going to leave you broke. ... That was very stressful," she said.

 

Taylor was not as fortunate when her case went to trial.

 

The Indiana nurse was rear-ended by a State Farm employee driving a State Farm car. Damage to her car was minimal but she suffered herniated disc and muscle tears.

 

Taylor racked up medical bills and lost wages amounting to about $15,000. The company offered her $2,000.

 

"I was just very insulted," she said.

 

She sued, but three years later a jury came back with a judgment for her of only $1,500.

 

The jury didn't believe she could be hurt in an accident in which the vehicle had barely a dent.

 

Three jurors told CNN photos of the two cars involved in the accident -- enlarged and prominently displayed by the defense -- played a huge role in their decision.

 

And one said they assumed Taylor had already been compensated by the insurance company and was just trying to get more money.

 

Profitable strategy

The cases, CNN found, illustrate a carefully developed strategy to make the victims look like they are trying to defraud the insurers.

 

But documents CNN obtained indicate profit, not fraud, is the reason companies decided to play hardball in small accidents.

 

For Allstate and State Farm, according to documents obtained by CNN, the strategy was developed in the mid-1990s with the assistance of consulting giant McKinsey & Co.

 

Looking for a way to boost profits, McKinsey focused on soft-tissue injuries incurred in minor crashes.

 

While the McKinsey documents -- numbered in the thousands -- are under seal in courts around the country, CNN saw several of them during a court hearing in Lexington, Kentucky.

 

Playing off Allstate's signature slogan, one document recommends the insurer put boxing gloves on its "good hands" for those who insist on going to court.

 

The strategy, according to former Allstate and State Farm employee Jim Mathis, relies on the three D's -- denying a claim, delaying settlement of the claim and defending against the claim in court.

 

"The profits are good, and as long as the community, the public allows this to occur, the insurance companies will get richer and people ... will not get a fair and reasonable settlement," Mathis said.

 

Both Allstate and State Farm declined requests for interviews.

 

In an e-mail, Allstate wrote it did not believe it would "have any real opportunity of being successful in getting you (CNN) to do a balanced report."

 

State Farm wrote: "We take customer service seriously and seek to pay what we owe, promptly, courteously and efficiently, and we handle each claim on its own merits."

 

The company also said, "Any attempt to generalize that State Farm adopted consultant recommendations as other insurers is just plain wrong."

 

A company spokesman sent an additional e-mail, saying that the company did work with McKinsey to improve claims handling but State Farm stopped using the McKinsey program in 1999.

 

Robert Hartwig, president of the Insurance Information Institute, told CNN insurers do not have a strategy of blanket denial of claims. He also said strategies to limit expenditures on minor-impact crashes are needed to fight fraud.

 

Hartwig specifically singled out lawyers who he claims make a living on car accident victims, saying those lawyers are upset because "the gravy train is over."

This seems somewhat relevant here.

[Bill Swerski]

Well In florida they stopped writing new flood insurance and the state chipped in. But all policies in the whole state?

 

That makes no sense to me, either.

 

Here's a story that outlines how stingy insurance companies are: My brother-in-law has some sort of medical condition where he's prone to seizures (which can be controlled by medication). The first seizure occurred at home when he was 17. Not knowing what the hell was going on, his mother naturally called an ambulance. Later on, the insurance company refused to pay for the ambulance visit because they didn't believe that that a perfectly-healthy 17-year-old suddently collapsing and going into a seizure was an "emergency situation." After my mother-in-law cussed them out and threatened to sue them over the phone, they caved and ponied up the money.

[rajncajn]

Sounds like a smart move. They have basically said, that in order to make it profitable, the insurance companies would have to jack the premiums up so high nobody would be able to afford them, so it's not worth it. They have a responsibility to their stockholders. Now you have to ask yourself, if an insurance company thinks it is too risky to take your money, why would should some of these areas be rebuilt with tax dollars?

 

Apparently you didn't see the part about record profits...

 

Well In florida they stopped writing new flood insurance and the state chipped in. But all policies in the whole state?

 

Yeah, the entire state of Mississippi regardless of the fact that the majority of the state was not affected. I wonder what they will do if everyone who currently have State Farm Homeowners and/or Auto policies decides they aren't going to let them push us around & dumps them for another company.

 

no, they're pulling up stakes because some judge essentially re-wrote homeowners policies that specifically EXCLUDED flood coverage so that they covered flood damage.

 

There's where you are wrong. The issue was with homes that recieved wind damage either heavily damaging or destroying the home before any water hit it. This DID happen to a lot of homes & State Farm, among others, refuse to pay because water did go through that area. The judge ruled that if State Farm could not prove that the damage was done by the flood waters then they should have to pay.

[yo mama]

Ok, so we all agree lawyers are evil.

 

Depends on your definition of "evil."

[Azazello1313]

Apparently you didn't see the part about record profits...

Yeah, the entire state of Mississippi regardless of the fact that the majority of the state was not affected. I wonder what they will do if everyone who currently have State Farm Homeowners and/or Auto policies decides they aren't going to let them push us around & dumps them for another company.

 

yeah, i agree it's a pretty lousy policy, a dumb, short-sighted way out of a complicated problem. hopefully, the residents of mississippi (and other states) make them regret it by taking their business elsewhere.

 

There's where you are wrong. The issue was with homes that recieved wind damage either heavily damaging or destroying the home before any water hit it. This DID happen to a lot of homes & State Farm, among others, refuse to pay because water did go through that area. The judge ruled that if State Farm could not prove that the damage was done by the flood waters then they should have to pay.

 

 

well, i'm sure an advocate for state farm would spin the ruling a little differently. bottom line is that due to a few choice legal rulings, their exposure on any given policy is ambiguous enough to them that they feel the best course of action is taking themselves out of a given market entirely.

[Perchoutofwater]

Depends on your definition of "evil."

 

 

Nope, all lawyers are evil, even mine. He's just more tolerable than most

[Azazello1313]

Depends on your definition of "evil."

 

that was funny

[Rockerbraves]

Sounds like a smart move. They have basically said, that in order to make it profitable, the insurance companies would have to jack the premiums up so high nobody would be able to afford them, so it's not worth it. They have a responsibility to their stockholders. Now you have to ask yourself, if an insurance company thinks it is too risky to take your money, why would should some of these areas be rebuilt with tax dollars?

 

 

Does sound like a smart move. Especially since UPS/FedEx type carriers don't deliver packages to certain areas unless it's profitable. Now you have to ask yourself, if a shipping company thinks it's not profitable to deliver packages to certain areas, why would should the US postal service do it with tax dollars?