Thursday, January 29, 2009

State Farm Ain't Here

"Like a good neighbor/ State Farm is there."
-- Ad jingle lyrics

Although it was profitable even in the hurricane-studded period of 2005-05, State Farm has been threatening to dump its Florida property insurance customers for the past four years.

Among other ridiculous shenanigans the company first talked the Florida legislature, back in '98, into letting it build a firewall between its Florida subsidiary and the parent corporation, so State Farm wouldn't have to disclose how much it really profits off all of its insurance businesses. Then, it started seeking out- of -sight premium hikes while overcharging its own Florida subsidiary for reinsurance.

Now, they claim they're finally going to do it. The largest insurer doing business in Florida has announced plans to drop an estimated 1.2 million Florida property insurance customers. Or, as one wag puts it, "State Farm is pulling out, because the house is no longer guaranteed its traditional winnings at blackjack."

Except it's not leaving right away. No, State Farm's spokeman says they will be 'phasing in' the plan to drop property insurance customers over two years. Moreover, any withdrawal plan also needs the approval of Florida regulators.

Bloomberg reports the company announced its plans "after state regulators denied a request to raise prices." Blackjack gone? Not really. The company still expects to be ripping off 2.8 million Floridians for auto, life, and health insurance. And it wants to continue having fun by "playing hardball" even with minor car-crash claims.

Legislation already has been introduced in the Florida state legislature to prohibit bad insurance neighbors like State Farm from "cherry picking." Under a bill being pushed by state senator Mike Fasano (R-New Port Richey) a company would have to offer "all the types of insurance it markets if it wants to do business at all in Florida."

Equally interesting is State Farm has announced "it intends to remain active in coastal Alabama." Why? Because Alabama regulators roll over every time the company asks for a rate increase without showing evidence of real need.

It's obvious State Farm is just playing the regulators. The company makes tons of money on property insurance, alone, even in Florida and even when we get hit by hurricanes. Indeed, according to a leaked draft of State Farm of Florida's withdrawal plan, "the 2004-2005 hurricanes put the company on the path to insolvency."

As the Orlando Sentinel, hardly a hotbed of anti-corporate radicalism, points out today, it won't be "the end of the world" if State Farm leaves Florida. Indeed, governor Charlie Crist says, "Floridians will be much better off without them."

State Farm not here? Thank goodness!

1 comment:

Good Tidings Nautical,Tropical Decor said...

Let Stete Farm leave, I hope y'all decide to cancel all of your insurance with state farm, that might hurt more than the hurricanrs. Did they forget this is the business they chose?