State Farm: No New Home Coverage In 17 States
By Daniel Hays
NU Online News Service, June 20, 4:40 p.m. EST?Anxious to trim its recent heavy losses, State Farm Insurance this week stopped writing new homeowners policies in 17 states.
The decision was announced internally on Monday and was first publicly reported when it was implemented for states in the company's "central zone," said a spokesman for the company, Phil Supple.
He said that within the affected zones, the company will continue to insure and renew policies for existing customers. It will also continue their coverage if they move, even to another state, he said.
"In some states we may do a [new] replacement [policy] if there is reduction in the existing number of policies in the state," he explained.
Mr. Supple noted that the homeowners line had resulted in 2001 losses of some $5 billion for the company, which was affected by negative trends in both frequency and severity.
The latter trend was attributed in part to rising expenses. "All over, the cost of repairing and rebuilding has gone up," Mr. Supple said.
He noted that for State Farm, "2001 was our third-worst year catastrophe-wise, right behind [1992's Hurricane] Andrew and [1994's] Northridge [earthquake]." At the same time, the stock market has slumped and company investment income has fallen. "Not helpful," said Mr. Supple.
The ban on writing new policies was implemented this week for State Farm's Central Zone, which encompasses Arkansas, Kansas, Louisiana, Missouri and Oklahoma. "Those states announced they would not be selling new homeowners?If you come through the door, we can't help you at this time," said Mr. Supple, adding, "We wanted to slow our growth."
The complete list of affected states was given as: Alaska, Arkansas, California, Hawaii, Idaho, Kansas, Louisiana, Maryland, Missouri, Montana, North Carolina, Oklahoma, Oregon, Texas, Virginia, Washington, and West Virginia.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.