State Farm Stops Ky. Homeowners Coverage

Dustin Miller, a representative for the property-casualty giant's Kentucky operations, said the decision concerning sales in Kentucky was effective Aug. 28.

Mr. Miller said the decision to "manage our homeowners growth" in Kentucky meant that new policies would only be provided to existing customers who bought a new home. "If you are a current customer, you can get a new policy."

The company has about 20 percent of the state's homeowners' market with 200,000 insureds, he said.

"We're currently managing our growth in all states, but not all to the same degree. These things are fluid. As things change, different decisions are made," he noted.

He said there were no plans to curtail writing homeowners insurance in Ohio.

In June, the company began cutting back activity for states in its "central zone." At that time, a representative for the company, Phil Supple, said that within affected zones, the company would continue to insure and renew policies for existing customers. It would 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 in June for State Farm's Central Zone, which encompasses Arkansas, Kansas, Louisiana, Missouri and Oklahoma.

The complete list of affected states was given then as: Alaska, Arkansas, California, Hawaii, Idaho, Kansas, Louisiana, Maryland, Missouri, Montana, North Carolina, Oklahoma, Oregon, Texas, Virginia, Washington, and West Virginia.