State Farm Insurance Companies--the largest homeowners insurer in Mississippi, with more than 30 percent of the market--last week suspended sales of any new commercial or homeowners' policies in the state, effective Feb. 16.
State Farm Senior Vice President Bob Trippel said the company took the action because of the increasingly unpredictable business and legal environment in the state. "We're just not in a position to accept any additional risk in this homeowners' market," he said in a statement.
Mississippi Insurance Commissioner George Dale said the move was "a stark reminder that the issues brought about by Hurricane Katrina affect not only the coast, but policyholders all across the state."
However, Mr. Dale added in a statement, "this decision will not affect the market-conduct examination of State Farm this office is currently conducting."
State Farm took heavy losses from 2005's Hurricane Katrina, and recently lost a case over contested storm-surge coverage that resulted in a federal jury granting $2.5 million in punitive damages to a homeowner. Right after that, State Farm agreed to settle hundreds of lawsuits and to re-open and pay thousands of other disputed claims. The settlement is being renegotiated after its rejection by a federal judge.
Mr. Dale said his department will continue "to do everything in our power to encourage all insurance companies, State Farm included, to continue to provide insurance to state residents. It is my hope that by continuing to work with State Farm, they will at some time in the future reverse this decision."
Mississippi Attorney General Jim Hood, who is in the middle of the settlement negotiations, said State Farm's announcement "is disappointing but not surprising to me."
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