Maybe Charlie should take his own advice. Give them a rate increase and let their customers decide if the brand name is worth the extra money. Come on people, free enterprise works.
Why not tell SF if they leave Florida for fire business then they must also leave with auto and any other coverage written? Tell them if they pull out of the fire business they can no longer write flood coverage in Florida.
As most of you know flood is a cash cow and a sweetheart deal for all of the companies.
Put some teeth in the law that says if a company insures your home they cannot withdraw coverage unless you have had a certain number of claims (natural disasters would not be included). The policyholder would have the choice of going to another carrier at any time and the new carrier would have the same rules.
The reason for this is most policyholders purchase a home with a mortgage of 30 years and are required to have insurance. Thus Insurance once purchased from a company would be required to be renewed unless the policyholder goes elsewhere or has the number of non natural claims that would allow a company to cancel.
This would keep companies like SF from flooding the market (sorry for the pun) and then threatening to pull out if their demands for rate increases are not met.
Should also be something requiring a company to allow its agents to sell for other companies if they refuse to write a particular coverage.
I believe that is the only way anyone is going to get SF to even resemble a neighbor, let alone good.
Just another socialist wanting the government to run our business. You are either not from this country or do not know what the constitution says. LEAVE
Hey concerned – take an insurance 101 class between ambulance chases and then get back to us. Your blathering reveals that you understand little about our noble profession.
three responses to concerned and not a single argument against… just attacks. how typical these days. that is the problem with posts on this site… attack attack attack and no solid arguments against.
For the record, i disagree with concerned, but i guess i am not as angry and bitter as some folks.
Ok Typical, just one. If you are going to make SF pull all lines, make all auto only, life only, surety only and wc only companies leave too. Only fair. Just one of many idiocies in the arguements regarding the Florida situation.
Yes, get rid of Progressive, Geico and others that don’t sell homeowners either. You cannot legislate that a company allows it’s employees to sell for the competition either. Personally I am not a big fan of State Farm but I don’t want them to leave Florida. Free market works only if all players are on a level playing field. Regulate all rates or none but don’t do anything special just for State Farm.
So, Florida citizens are being denied the right to purchase a Homeowners policy from State Farm, and the solution is to deny them the right to purchase Auto, Life, and other policies as well?
Let’s keep things in focus here. Why is there a near crisis in the homeowner market in Florida? Would you agree it is because companies like SF have insured huge numbers of homes and then suddenly threaten to leave if they don’t get the rates they want? Wouldn’t you consider this a blackmail of sorts?
Wouldn’t it be beneficial for the policyholder to have the guarantee they will not be left in the lurch after committing to a 30 yr mortgage?
If a company agrees to insure a home they should be willing to continue to insure it as long as the premiums are paid and numerous claims are not submitted.
If you had those type of guarantees then the free market might work. The policyholder could change at any time they found a better rate so it would behoove the insurer to keep their rates in line.
As stated earlier by someone else, your posts show a complete lack of understanding of the insurance industry, and business in general. The costs of insuring risk changes over time, and rates must be allowed to cover that risk or companies won’t sell policies.
The current crisis was created directly by the government forcing companies to give mitigation discounts to the majority of their Florida policyholders without being able to offset the lost premium by raising rates on unmitigated homes.
By the way, if, as you suggest, companies should be required to insure homes indefinitely, nobody would sell homeowners insurance at all, or only at a rate many times what Floridians are paying now.
Obviously Concerned doesn’t understand the product. Get an education. My baby should have the same price on milk until they are an adult. I should pay the same price for gas until I get a different car. Think before posting.
Can someone explain why GEICO and Progressive and Others, are even still here in FL since we have a “LAW” called the CHERRY Picking Law, which I understand is suppose to prevent companies from just selling auto here, if they sell homeowner’s in other states? Is that what STATE LOBBYIST ARE FOR??
PS: I don’t agree with Mr. Concerned. He’s a CHRIST supporter I’m POSITIVE!
I don’t know what market you’re playing in Concerned, but I don’t like it.
Right now insurance is pretty readily available. People end up in Citizens for a few reasons but the number one reason is because their State Farm agent put them there. The reason we as agents don’t want State Farm to go away is because the private market isn’t ready to absorb that many policies. The readily available policies will be taken quickly by savvy State Farm Customers.
There is no such thing as a sure thing. Companies must be allowed to manage their risk. If they can’t collect appropriate premium, the next best thing is to cancel policies.
Praise the Lord. I believe Kevin McCarty is coming out of his coma!!!
Sounds like maybe he’s starting to figure out that Crist isn’t a shoe in for next US Senator and that his “public option” property insurance scam has been labeled a real disaster putting Florida on the road to bankruptcy. He aligned himself closely with Crist and Crist is now falling apart.
By the way, have you heard about the upcoming bill that will be filed by Senator Bennett regarding the Insurance Commissioner’s position? McCarty’s been a huge obstacle to bringing sanity back to the property insurance market. Many legislators want him gone and I’d bet Alex Sink wants him out, too. I think McCarty will be gone by May, probably sooner.
CONCERNED IS RIGHT. I don’t think he is saying the PREMIUM should be level for 30 years, he is saying the COMMITMENT should be contractual for 30 years. Ever hear of Cincinnati 3 YEAR HOME INSURANCE RENEWAL GUARANTEE. Did you know that State Farm OFFERED a GUARANTEED RENEWABLE FOR LIFE AUTO POLICY? It is putting your “money where your mouth is” and with proper underwriting a 30 year guaranteed renewable ho policy could work for company and consumer… Indeed, State Harms current media mantra is: I’ll be there; I’ll be there, there, there WHERE? Exiting the state says corporate… The State Harm agents have We’ll Be There on their office doors as they are considering retirement, that is if they were smart enough to SOCK AWAY THEIR MILLIONS during the GOOD TIMES of the 70’s, 80’s and most of the 90’s when the agents were prostituting the Fire Company just to get to the Auto Premium. Can’t blame the agents for doing that because CORPORATE turned a blind eye to properly underwriting their homeowners & bop business, as long as the mutual auto premium was coming in to Mother Mutual, everyone was happy. Well now that the majority of the homeowners book is older and experiencing Water Damage claims and mold and, oh yeah, an occasional HURRICANE. Imagine that, Hurricanes can cause property damage in Florida… 50% of the stagnating property book is causing a 90% loss ratio and State Harm Wants Off before another INFUSION form State Harm Mutual Auto is needed, you know, like the BILLION before and the Billion in Texas, where the same thing is occurring as Florida, but Texas is just 5 years or so behind us…
All CONCERNED IS SAYING is that companies shouldn’t be allowed to MANIPULATE THE MARKET with unrealistic, low prices or loss leaders, profit immensely and then LEAVE THE RUINS BEHIND. It smacks of exploitation. If State Harm was not allowed to dominate the property market in Florida for so long, more companies could have come into the state to SPREAD THE CAT RISK. Although if the insurance commissioner in the 70’s and 80’s would have WENT THE OTHER WAY and MANDATED an ACUARILY SOUND RATE for State Farm back then reducing their propensity for market share… State Harm would have complained that the state was putting them out of business just as they are now. Spreading of the Risk with MORE COMPANIES IN FLORIDA in conjunction with HARDENING OF HOMES is the two pronged real solution to the property insurance problem in Florida and as State Farm and the other Oligopoly Players, Allstate and Nationwide, continue to reduce their books, the new players are underwriting properly and picking up the better risks for closer to actuarially sound pricing than ever before…. Problem beginning to be solved.
Look, State Harm prostituted their Fire Company, with LOW PRICING for past 30 years, just to get to the auto, AND NOW they discover that MAYBE WE SHOULDN’T HAVE DONE THAT and desire 50%, 75%, 100% (STOP ME) RATE INCREASES every other year. That is LUDICROUS.
McCarthy and Crist have a DUTY to make State Harm feel some of the pain that STATE FARM CREATED FOR THEMSELVES by SLOWING THE RATE INCREASE DOWN SO THAT THE CONSUMERS CAN BUILD UP TO IT. Unless you think the average wage in Florida is $100,000 per year, not per household, but per person…
State Farm benefited and profited immensely from LACK of regulation during 30 YEARS OF THE GOOD TIMES. So now, due to lack of concern for prudent underwriting, REGULATION is finally catching up to them and MITIGATING HUGE, DESTAILITIZING RATE INCREASES as well as MITIGATING MASSIVE EXIT FROM THE MARKET which would cause major destabilization.
Sooner or later, lack of underwriting and whorish mentality towards business WILL CATCH UP TO YOU, I mean will catch up to State Farm!
Omnisure gets it! I am not saying the price of the coverage has to remain static. The insurance companies just have to guarantee they will not drop a policyholder unless they don’t pay their premium or have a certain number of non weather related claims.
I remember firnly that it was the Governor who said “Ba-Bye and good ridins” when State Farm first announced they were leaving. Has the govenor suddenly gotten wise and educated on the matter. Hold your ground State Farm, demand the rate increase or leave. Don’t let them call your bluff. You need the rate and the industry is depending on you to not cave in. remember you will be bankrupt in 2011 if you dont get the rate you asked for. and who wants to be insured by a carrier that publically says they are failing fast.
Per Omnisure “All CONCERNED IS SAYING is that companies shouldn’t be allowed to MANIPULATE THE MARKET with unrealistic, low prices or loss leaders, profit immensely and then LEAVE THE RUINS BEHIND.” Tell me, how does a business profit through the use of a “loss leader”? Profit a loss leader are mutually exclusive.
DEPOT,
I’m givin you “props” too! You are correct, LOSS LEADER and PROFIT are MUTUALY EXCLUSIVE… Especailly because State Harm’s LOSS LEADER (their Fire & Casualty Co/SF Florida Ins Co)has EXPOSED their PROFIT CENTER: SF MUTUAL AUTO COMPANY to BILLIONS OF DOLLARS OF FIRE LOSSES via the Florida HO/BOP market and don’t forget TEXAS…
HOWEVER, the concept of LOSS LEADER can work for other types of businesses ie: when WALL MART sells KETCHUP for a LOSS with the hope that custmers may purchase HIGHER PRICED HOT DOGS AND BUNS to make up for the loss on the ketchup. Problem is STATE HARM IS SUPPOSED TO BE AN INSURANCE COMPANY, not a RETAIL GIANT. Insurance is really a bit more technical and UNDERWRITING should be, at the very least, a small concern VERSUS MARKET DOMINATION AT ALL COST.
Somewhere between the LAW OF LARGE NUMBERS and ANTICIPATED FUTURE LOSSES State Harm corporate got confused?
Maybe I’m wrong, maybe the best model for an “insurance company” is to act like a RETAIL GIANT you know Pile it High and Sell it CHEAP. Next thing you know WALL MART will be selling State Harm Insurance. I wonder if you’ll be able to use the AUTOMATED CHECKOUT for that home and auto policy or if they will require a CASHIER to actually assist the customer after they ring up their groceries?
“I don’t think he is saying the PREMIUM should be level for 30 years, he is saying the COMMITMENT should be contractual for 30 years.”
Guaranteed renewals increase risk. Expanding that to 30 years becomes extremely cost prohibitive. We’re talking about a state where companies can’t charge adequate premiums with the option to cancel policies. Can you imagine the difficulty of obtaining a rate increase when the OIR knows you can’t cancel any of your policies?
“when the agents were prostituting the Fire Company just to get to the Auto Premium.”
ALL companies were willing to take a small loss on HO in order to write the much larger premium auto policies. It wasn’t a large subsidy, and it didn’t affect the market as long as everyone was doing it. That all changed when the auto-only writers came along, but the more important point is that NONE of this had anything to do with Florida’s situation. You’re assuming that risk is a constant, which it is not. When hurricane activity increased in the 90’s, it became clear that premiums were grossly inadequate to cover the increasing hurricane risk and the explosion in coastal construction that had occurred during the low activity period.
“Spreading of the Risk with MORE COMPANIES IN FLORIDA in conjunction with HARDENING OF HOMES is the two pronged real solution to the property insurance problem in Florida”
This is actually true. Unfortunately, the state is working against both of these. There are far fewer companies writing in Floirda now than there were in the 90’s, with much of the market insuring itself at inadequate rates through Citizens (until the wind blows, anyway). Providing mitigation discounts would seem to be a sensible way to encourage insureds to harden their homes, but the state screwed this up so bad they’re giving discounts to virtually everyone in the state without any changes in the hurricane resistance of the home stock.
“the new players are underwriting properly and picking up the better risks for closer to actuarially sound pricing than ever before”
According to Kevin McCarty, over half of Florida-domiciled companies have experienced an underwriting loss so far this year-with no hurricanes.
Let’s look at some of these new players who are “doing things right.”
Coral Insurance Company: Out of Business
Edison Insurance Company: Now rated “NR” at Demotech.
American Keystone: Out of Business
Add these carriers to the 50% or so that cannot turn a profit with no hurricanes and it’s apparent that these new players aren’t doing things right, and even if they could they aren’t permitted to by the socialists in state government.
There are a few, and note I said a few, start up carriers with sound business plans and a good approach to underwriting. Most people in the “risky” counties can’t get a policy with these carriers because they can’t collect a proper premium.
It is simple, I know this is out of style right now, but how about free market capitalism. huh….
Let State farm charge 100K premium for 100K home if they want, If you dont like it insure it with Mutual of Oh my God.
This is america, It is your choice and your risk you are transfering to a carrier. Pick whichever one you want at whatever price they want to charge. Its still a free country isnt it?
Per Omnisure “All CONCERNED IS SAYING is that companies shouldn’t be allowed to MANIPULATE THE MARKET with unrealistic, low prices or loss leaders, profit immensely and then LEAVE THE RUINS BEHIND.” Tell me, how does a business profit through the use of a “loss leader”? Profit a loss leader are mutually exclusive.
mutual solution to keep State Farm selling property insurance in Florida:
Insurance Commissioner Kevin McCarty told the Florida Cabinet Tuesday that State Farm may not leave the state’s property insurance market as planned and the state is developing a report card on insurers to help consumers and increase competition.
“We’d like them to be a good neighbor so long as they are a fair neighbor,” Gov. Charlie Crist said about McCarty’s prediction that State Farm will stay in Florida in a smaller form.
Font Size:Default font sizeLarger font sizeBILOXI, Miss. (MCT) – In some cases, State Farm’s top leadership prefers not to share or even keep records that offer insight into how policyholder claims are handled, according to court records.
Chairman and CEO Edward B. Rust Jr. said in sworn testimony earlier this month that no minutes are kept of quarterly meetings held by the company’s top management, the Chairman’s Council, and that policyholders have no right to information about an investigation State Farm Insurance Cos. has ordered of its relationship with Haag Engineering Co.
State Farm spokesman Phil Supple said the company doesn’t “intend to-;try this-;case in the media.”
“State Farm stands by testimony given by President and Vice Chairman Vince Trosino, who said when asked about these allegations, ‘It’s not part of our system. It’s not part of our core values. It’s not what made us the most successful property and casualty insurer, life insurer, in the country.'”
Juries in two states, Texas and Oklahoma, have found Haag provided biased reports to State Farm to minimize or deny policyholder claims. Mississippi’s attorney general currently is conducting a grand jury investigation to determine whether State Farm and other insurers denied Hurricane Katrina claims through the use of fraudulent engineering reports.
Haag denies bias, but State Farm suspended business with the company in June and ordered an independent investigation after an Oklahoma jury awarded a total of $13 million to a policyholder over tornado damages. Subsequent trials are set to determine damages for 70 other policyholders, all of whom had claims investigated by Haag.
In past court cases, judges have chastised and even fined State Farm for withholding records the company was ordered to produce. Evidence the company destroyed documents has been presented in several cases.
In the Oklahoma case, after State Farm finally turned over to the court a “claims legal research” DVD and other records, Judge Richard G. Van Dyck told company attorneys
“As I was watching these tapes I just want to say this for the record, the hair on the back of my neck did – did stand up because I was seeing things there that early on in this case I was told by (State Farm) defense counsel didn’t exist and couldn’t be produced. So I’m not real happy with that and I want to remind all counsel that their ethical responsibilities as attorneys outweigh the wishes of their clients.”
Gary T. Fye, an expert in the analysis of disputed insurance claims who lives in Nevada, often testifies in insurance cases. Fye, who said he has testified on behalf of policyholders and insurance companies, has provided the courts information on State Farm’s history of destroying and withholding records.
In 1998, Fye wrote in a Florida case
“I have been witnessing document destruction, concealment, and obstruction of discovery by State Farm for many years in connection with my review of internal claim practices documents of the insurer. I have accumulated certain Exhibits which show the company’s goals and objectives for document handling by its employees. The documents show close to 28 years of intentional destruction, concealment and distortion of claim practices records.”
In some cases, company executives did not keep records.
Jeff Marr, the attorney suing State Farm in Oklahoma, took sworn testimony Sept. 6 from Rust. Topics included Rust’s Chairman’s Council, made up of top State Farm executives. The group, which includes the company’s general counsel, meets quarterly.
Marr was fishing for records of those meetings that he could subpoena for his lawsuit.
“Certainly,” Marr asked Rust, “you keep records of the quarterly meetings where the entire Chairman’s Council is present?”
“We have an agenda,” Rust said, “but minutes in that, no.”
“Why not?” Marr asked.
Rust replied, “Never felt a need to.”
Marr later asked, “Are there any written agendas that are available should I choose to request them in the lawsuit?”
“I’m not sure what might be available,” Rust said.
Rust also said policyholders, who essentially own the private mutual company, are not entitled to know what the Chairman’s Council discusses or decides about litigation against State Farm, citing attorney-client privilege.
Marr questioned why the company would withhold information from policyholders, who own State Farm.
“Well, again,” said Rust (who has a law degree), “I’m not an expert in the area, but I think as you find – even if I’m a shareholder in a publicly traded company, there are things that are not – you know, I do not have access to.”
Marr later asked if policyholders have a right to see documents from State Farm’s investigation of Haag.
We’d like them to be a good neighbor so long as they are a fair neighbor,” Gov. Charlie Crist said about McCarty’s prediction that State Farm will stay in Florida in a smaller form.
Font Size:Default font sizeLarger font sizeBILOXI, Miss. (MCT) – In some cases, State Farm’s top leadership prefers not to share or even keep records that offer insight into how policyholder claims are handled, according to court records.
TO THE UNTOUCHABLES. Edward B. Rust, Jr., will be happy to tell you that he is the Chief Executive Officer of State Farm Mutual Insurance Company. He has deep family ties to State Farm, as his father and grand father have both served in that capacity. He will also tell you that he is an educated man who has been to law school and is a past practicing attorney. In addition, he was the chairman of the Coalition for Excellence in Education and a member of George W. Bush’s transition advisory team on education. So with all of that education why will he not deal with his company’s inbred greed. Does he not know that we are in the 21st century where anyone can look on the internet and see the billions of dollars that are being spent to protect their empire from the consumer? In Utah, the company was fine $25 million in punitive damages, in part for the “systematic destruction of documents and systematic manipulation of individual claim files to conceal claim mishandling”. An Idaho appeals court fined the company $9.5 million in punitive damages for making use of “a completely bogus” outside bill review company that helped lower the cost of medical bills. In October of 1999, an Illinois jury rendered a $456 million judgment against State Farm and an additional $730 million in punitive damages for the insurer’s breach of contract with auto policy holders by relying on generic replacement parts. Rust was adamant in his insistence that fraud had not been committed. A class action law suit in the name of State Farm policy holders was filed in 2003 for breach of contract and statutory consumer fraud in which $1.1 billion was awarded to plaintiffs. When a company is misleading the public, should that not be considered fraud? A consumer would go to prison for that type of behavior. State Farm will let you know that, in several states, fraud and abuse is pushing up the cost of auto insurance. A court in late 2001 reached an unfriendly consumer decision that could have the effect of reaching deep into the pockets of the consumer. Sharply higher jury awards in vehicular liability cases are putting additional upward pressure on auto insurance rates. The average jury award in auto liability cases rose from $187,000 to $269,000 in 2000, an increase of 44%. I question if any of the lawsuits would be necessary if the company would just fairly pay their claims. The company represents on their web-site that consumer protection is one of their most important goals, but do they really think that courts would be awarding multiple millions of dollars in bad faith claims if that were their emphasis? State Farm’s ratings are based on their financial strength. State Farm states that their high ratings are also based on strong claims paying ability. With this ability, why is it necessary for their policy holders to allege that the claims department was directed, in evaluating their cases, to take them to trial instead of settling within the limits of the policy? This practice exposed policyholders to judgments above the limits of their policies, when the company was attempting to make an effort to win smaller decisions. Two former in-house attorneys for State Farm contend that they were often called upon by the insurer to represent its’ policy holders and were forced to commit “unlawful and unethical activities, including requiring the two to stay silent about the rights of the policyholders”. State Farm seems to have reckless indifference for the truth for the purpose of corporate and personal economic gain. State Farm should know that continued scrutiny of their claims paying practices will continue especially with the advent of new claims that are surfacing from lawsuits revolving around Hurricane Katrina. A message to Mr. Rust, and any employee of the company that is acting in bad faith for its policy holders. Its time to stop no more.
This is exactly how it will play out with private health insurers, when the federal government decides United Healthcare shouldn’t charge what they need to charge to make a profit…….people exit the market.
This is a PERFECT argument against Obama and the democrats alleged “health reform”…………….
What does it have to do with the state not allowing a rate increase?
Under your argument, of State Farm systematically screwing their policyholders, they would simply have required a LARGER INCREASE than they asked for, in order to make up for the additional claim payments.
THE LIBERALS ARE EITHER NAIVE OR NARCISISTIC. THE NAIVE ONES CAN BE GOOD PEOPLE, BUT THE NARCISISTS WANT TO BE WORSHIPPED, SO THEY DON’T CARE IF PRIVATE COMPANIES “PULL OUT” OR FAIL, CUZ THEN EVERYTHING WILL BE TAXPAYER-FUNDED, AND WE WILL NEED TO WORSHIP THE LEADERS TO GET FED AND HOUSED. WAKE UP, GOOD LIBERALS AND CONSERVATIVES ALIKE, BEFORE IT IS TOO LATE!!!
Maybe Charlie should take his own advice. Give them a rate increase and let their customers decide if the brand name is worth the extra money. Come on people, free enterprise works.
Why not tell SF if they leave Florida for fire business then they must also leave with auto and any other coverage written? Tell them if they pull out of the fire business they can no longer write flood coverage in Florida.
As most of you know flood is a cash cow and a sweetheart deal for all of the companies.
Put some teeth in the law that says if a company insures your home they cannot withdraw coverage unless you have had a certain number of claims (natural disasters would not be included). The policyholder would have the choice of going to another carrier at any time and the new carrier would have the same rules.
The reason for this is most policyholders purchase a home with a mortgage of 30 years and are required to have insurance. Thus Insurance once purchased from a company would be required to be renewed unless the policyholder goes elsewhere or has the number of non natural claims that would allow a company to cancel.
This would keep companies like SF from flooding the market (sorry for the pun) and then threatening to pull out if their demands for rate increases are not met.
Should also be something requiring a company to allow its agents to sell for other companies if they refuse to write a particular coverage.
I believe that is the only way anyone is going to get SF to even resemble a neighbor, let alone good.
Just another socialist wanting the government to run our business. You are either not from this country or do not know what the constitution says. LEAVE
Some folks just don’t have a clue . . . . .
Hey concerned – take an insurance 101 class between ambulance chases and then get back to us. Your blathering reveals that you understand little about our noble profession.
three responses to concerned and not a single argument against… just attacks. how typical these days. that is the problem with posts on this site… attack attack attack and no solid arguments against.
For the record, i disagree with concerned, but i guess i am not as angry and bitter as some folks.
Ok Typical, just one. If you are going to make SF pull all lines, make all auto only, life only, surety only and wc only companies leave too. Only fair. Just one of many idiocies in the arguements regarding the Florida situation.
But posting an attack against the attackers is okay for some reason? By the way, you don’t need to present a solid argument against a stupid post.
Yes, get rid of Progressive, Geico and others that don’t sell homeowners either. You cannot legislate that a company allows it’s employees to sell for the competition either. Personally I am not a big fan of State Farm but I don’t want them to leave Florida. Free market works only if all players are on a level playing field. Regulate all rates or none but don’t do anything special just for State Farm.
So, Florida citizens are being denied the right to purchase a Homeowners policy from State Farm, and the solution is to deny them the right to purchase Auto, Life, and other policies as well?
Let’s keep things in focus here. Why is there a near crisis in the homeowner market in Florida? Would you agree it is because companies like SF have insured huge numbers of homes and then suddenly threaten to leave if they don’t get the rates they want? Wouldn’t you consider this a blackmail of sorts?
Wouldn’t it be beneficial for the policyholder to have the guarantee they will not be left in the lurch after committing to a 30 yr mortgage?
If a company agrees to insure a home they should be willing to continue to insure it as long as the premiums are paid and numerous claims are not submitted.
If you had those type of guarantees then the free market might work. The policyholder could change at any time they found a better rate so it would behoove the insurer to keep their rates in line.
As stated earlier by someone else, your posts show a complete lack of understanding of the insurance industry, and business in general. The costs of insuring risk changes over time, and rates must be allowed to cover that risk or companies won’t sell policies.
The current crisis was created directly by the government forcing companies to give mitigation discounts to the majority of their Florida policyholders without being able to offset the lost premium by raising rates on unmitigated homes.
By the way, if, as you suggest, companies should be required to insure homes indefinitely, nobody would sell homeowners insurance at all, or only at a rate many times what Floridians are paying now.
Obviously Concerned doesn’t understand the product. Get an education. My baby should have the same price on milk until they are an adult. I should pay the same price for gas until I get a different car. Think before posting.
Can someone explain why GEICO and Progressive and Others, are even still here in FL since we have a “LAW” called the CHERRY Picking Law, which I understand is suppose to prevent companies from just selling auto here, if they sell homeowner’s in other states? Is that what STATE LOBBYIST ARE FOR??
PS: I don’t agree with Mr. Concerned. He’s a CHRIST supporter I’m POSITIVE!
“MARCO 2010” – Can’t wait for the debate.
GEICO and Progressive don’t sell homeowners in other states. The act as agents for Trav and Homesite.
I don’t know what market you’re playing in Concerned, but I don’t like it.
Right now insurance is pretty readily available. People end up in Citizens for a few reasons but the number one reason is because their State Farm agent put them there. The reason we as agents don’t want State Farm to go away is because the private market isn’t ready to absorb that many policies. The readily available policies will be taken quickly by savvy State Farm Customers.
There is no such thing as a sure thing. Companies must be allowed to manage their risk. If they can’t collect appropriate premium, the next best thing is to cancel policies.
Praise the Lord. I believe Kevin McCarty is coming out of his coma!!!
Sounds like maybe he’s starting to figure out that Crist isn’t a shoe in for next US Senator and that his “public option” property insurance scam has been labeled a real disaster putting Florida on the road to bankruptcy. He aligned himself closely with Crist and Crist is now falling apart.
By the way, have you heard about the upcoming bill that will be filed by Senator Bennett regarding the Insurance Commissioner’s position? McCarty’s been a huge obstacle to bringing sanity back to the property insurance market. Many legislators want him gone and I’d bet Alex Sink wants him out, too. I think McCarty will be gone by May, probably sooner.
Read this…
http://blogs.tampabay.com/buzz/2009/11/bennett-bill-a-mccarty-payback.html
CONCERNED IS RIGHT. I don’t think he is saying the PREMIUM should be level for 30 years, he is saying the COMMITMENT should be contractual for 30 years. Ever hear of Cincinnati 3 YEAR HOME INSURANCE RENEWAL GUARANTEE. Did you know that State Farm OFFERED a GUARANTEED RENEWABLE FOR LIFE AUTO POLICY? It is putting your “money where your mouth is” and with proper underwriting a 30 year guaranteed renewable ho policy could work for company and consumer… Indeed, State Harms current media mantra is: I’ll be there; I’ll be there, there, there WHERE? Exiting the state says corporate… The State Harm agents have We’ll Be There on their office doors as they are considering retirement, that is if they were smart enough to SOCK AWAY THEIR MILLIONS during the GOOD TIMES of the 70’s, 80’s and most of the 90’s when the agents were prostituting the Fire Company just to get to the Auto Premium. Can’t blame the agents for doing that because CORPORATE turned a blind eye to properly underwriting their homeowners & bop business, as long as the mutual auto premium was coming in to Mother Mutual, everyone was happy. Well now that the majority of the homeowners book is older and experiencing Water Damage claims and mold and, oh yeah, an occasional HURRICANE. Imagine that, Hurricanes can cause property damage in Florida… 50% of the stagnating property book is causing a 90% loss ratio and State Harm Wants Off before another INFUSION form State Harm Mutual Auto is needed, you know, like the BILLION before and the Billion in Texas, where the same thing is occurring as Florida, but Texas is just 5 years or so behind us…
All CONCERNED IS SAYING is that companies shouldn’t be allowed to MANIPULATE THE MARKET with unrealistic, low prices or loss leaders, profit immensely and then LEAVE THE RUINS BEHIND. It smacks of exploitation. If State Harm was not allowed to dominate the property market in Florida for so long, more companies could have come into the state to SPREAD THE CAT RISK. Although if the insurance commissioner in the 70’s and 80’s would have WENT THE OTHER WAY and MANDATED an ACUARILY SOUND RATE for State Farm back then reducing their propensity for market share… State Harm would have complained that the state was putting them out of business just as they are now. Spreading of the Risk with MORE COMPANIES IN FLORIDA in conjunction with HARDENING OF HOMES is the two pronged real solution to the property insurance problem in Florida and as State Farm and the other Oligopoly Players, Allstate and Nationwide, continue to reduce their books, the new players are underwriting properly and picking up the better risks for closer to actuarially sound pricing than ever before…. Problem beginning to be solved.
Look, State Harm prostituted their Fire Company, with LOW PRICING for past 30 years, just to get to the auto, AND NOW they discover that MAYBE WE SHOULDN’T HAVE DONE THAT and desire 50%, 75%, 100% (STOP ME) RATE INCREASES every other year. That is LUDICROUS.
McCarthy and Crist have a DUTY to make State Harm feel some of the pain that STATE FARM CREATED FOR THEMSELVES by SLOWING THE RATE INCREASE DOWN SO THAT THE CONSUMERS CAN BUILD UP TO IT. Unless you think the average wage in Florida is $100,000 per year, not per household, but per person…
State Farm benefited and profited immensely from LACK of regulation during 30 YEARS OF THE GOOD TIMES. So now, due to lack of concern for prudent underwriting, REGULATION is finally catching up to them and MITIGATING HUGE, DESTAILITIZING RATE INCREASES as well as MITIGATING MASSIVE EXIT FROM THE MARKET which would cause major destabilization.
Sooner or later, lack of underwriting and whorish mentality towards business WILL CATCH UP TO YOU, I mean will catch up to State Farm!
Sean Hannity
Omnisure gets it! I am not saying the price of the coverage has to remain static. The insurance companies just have to guarantee they will not drop a policyholder unless they don’t pay their premium or have a certain number of non weather related claims.
I remember firnly that it was the Governor who said “Ba-Bye and good ridins” when State Farm first announced they were leaving. Has the govenor suddenly gotten wise and educated on the matter. Hold your ground State Farm, demand the rate increase or leave. Don’t let them call your bluff. You need the rate and the industry is depending on you to not cave in. remember you will be bankrupt in 2011 if you dont get the rate you asked for. and who wants to be insured by a carrier that publically says they are failing fast.
State Farm would love to have most insureds for 30 years, IF THEY WERE ALLOWED TO CHARGE ADEQUATE RATES!
Per Omnisure “All CONCERNED IS SAYING is that companies shouldn’t be allowed to MANIPULATE THE MARKET with unrealistic, low prices or loss leaders, profit immensely and then LEAVE THE RUINS BEHIND.” Tell me, how does a business profit through the use of a “loss leader”? Profit a loss leader are mutually exclusive.
DEPOT,
I’m givin you “props” too! You are correct, LOSS LEADER and PROFIT are MUTUALY EXCLUSIVE… Especailly because State Harm’s LOSS LEADER (their Fire & Casualty Co/SF Florida Ins Co)has EXPOSED their PROFIT CENTER: SF MUTUAL AUTO COMPANY to BILLIONS OF DOLLARS OF FIRE LOSSES via the Florida HO/BOP market and don’t forget TEXAS…
HOWEVER, the concept of LOSS LEADER can work for other types of businesses ie: when WALL MART sells KETCHUP for a LOSS with the hope that custmers may purchase HIGHER PRICED HOT DOGS AND BUNS to make up for the loss on the ketchup. Problem is STATE HARM IS SUPPOSED TO BE AN INSURANCE COMPANY, not a RETAIL GIANT. Insurance is really a bit more technical and UNDERWRITING should be, at the very least, a small concern VERSUS MARKET DOMINATION AT ALL COST.
Somewhere between the LAW OF LARGE NUMBERS and ANTICIPATED FUTURE LOSSES State Harm corporate got confused?
Maybe I’m wrong, maybe the best model for an “insurance company” is to act like a RETAIL GIANT you know Pile it High and Sell it CHEAP. Next thing you know WALL MART will be selling State Harm Insurance. I wonder if you’ll be able to use the AUTOMATED CHECKOUT for that home and auto policy or if they will require a CASHIER to actually assist the customer after they ring up their groceries?
BEEP… BEEP.. BEEP
So many errors, so little time…
“I don’t think he is saying the PREMIUM should be level for 30 years, he is saying the COMMITMENT should be contractual for 30 years.”
Guaranteed renewals increase risk. Expanding that to 30 years becomes extremely cost prohibitive. We’re talking about a state where companies can’t charge adequate premiums with the option to cancel policies. Can you imagine the difficulty of obtaining a rate increase when the OIR knows you can’t cancel any of your policies?
“when the agents were prostituting the Fire Company just to get to the Auto Premium.”
ALL companies were willing to take a small loss on HO in order to write the much larger premium auto policies. It wasn’t a large subsidy, and it didn’t affect the market as long as everyone was doing it. That all changed when the auto-only writers came along, but the more important point is that NONE of this had anything to do with Florida’s situation. You’re assuming that risk is a constant, which it is not. When hurricane activity increased in the 90’s, it became clear that premiums were grossly inadequate to cover the increasing hurricane risk and the explosion in coastal construction that had occurred during the low activity period.
“Spreading of the Risk with MORE COMPANIES IN FLORIDA in conjunction with HARDENING OF HOMES is the two pronged real solution to the property insurance problem in Florida”
This is actually true. Unfortunately, the state is working against both of these. There are far fewer companies writing in Floirda now than there were in the 90’s, with much of the market insuring itself at inadequate rates through Citizens (until the wind blows, anyway). Providing mitigation discounts would seem to be a sensible way to encourage insureds to harden their homes, but the state screwed this up so bad they’re giving discounts to virtually everyone in the state without any changes in the hurricane resistance of the home stock.
“the new players are underwriting properly and picking up the better risks for closer to actuarially sound pricing than ever before”
According to Kevin McCarty, over half of Florida-domiciled companies have experienced an underwriting loss so far this year-with no hurricanes.
Let’s look at some of these new players who are “doing things right.”
Coral Insurance Company: Out of Business
Edison Insurance Company: Now rated “NR” at Demotech.
American Keystone: Out of Business
Add these carriers to the 50% or so that cannot turn a profit with no hurricanes and it’s apparent that these new players aren’t doing things right, and even if they could they aren’t permitted to by the socialists in state government.
There are a few, and note I said a few, start up carriers with sound business plans and a good approach to underwriting. Most people in the “risky” counties can’t get a policy with these carriers because they can’t collect a proper premium.
It is simple, I know this is out of style right now, but how about free market capitalism. huh….
Let State farm charge 100K premium for 100K home if they want, If you dont like it insure it with Mutual of Oh my God.
This is america, It is your choice and your risk you are transfering to a carrier. Pick whichever one you want at whatever price they want to charge. Its still a free country isnt it?
Is that who you’re writing personal lines with these days Bill? I heard they got an A rating from Demotech…lol
Per Omnisure “All CONCERNED IS SAYING is that companies shouldn’t be allowed to MANIPULATE THE MARKET with unrealistic, low prices or loss leaders, profit immensely and then LEAVE THE RUINS BEHIND.” Tell me, how does a business profit through the use of a “loss leader”? Profit a loss leader are mutually exclusive.
mutual solution to keep State Farm selling property insurance in Florida:
Insurance Commissioner Kevin McCarty told the Florida Cabinet Tuesday that State Farm may not leave the state’s property insurance market as planned and the state is developing a report card on insurers to help consumers and increase competition.
“We’d like them to be a good neighbor so long as they are a fair neighbor,” Gov. Charlie Crist said about McCarty’s prediction that State Farm will stay in Florida in a smaller form.
Font Size:Default font sizeLarger font sizeBILOXI, Miss. (MCT) – In some cases, State Farm’s top leadership prefers not to share or even keep records that offer insight into how policyholder claims are handled, according to court records.
Chairman and CEO Edward B. Rust Jr. said in sworn testimony earlier this month that no minutes are kept of quarterly meetings held by the company’s top management, the Chairman’s Council, and that policyholders have no right to information about an investigation State Farm Insurance Cos. has ordered of its relationship with Haag Engineering Co.
State Farm spokesman Phil Supple said the company doesn’t “intend to-;try this-;case in the media.”
“State Farm stands by testimony given by President and Vice Chairman Vince Trosino, who said when asked about these allegations, ‘It’s not part of our system. It’s not part of our core values. It’s not what made us the most successful property and casualty insurer, life insurer, in the country.'”
Juries in two states, Texas and Oklahoma, have found Haag provided biased reports to State Farm to minimize or deny policyholder claims. Mississippi’s attorney general currently is conducting a grand jury investigation to determine whether State Farm and other insurers denied Hurricane Katrina claims through the use of fraudulent engineering reports.
Haag denies bias, but State Farm suspended business with the company in June and ordered an independent investigation after an Oklahoma jury awarded a total of $13 million to a policyholder over tornado damages. Subsequent trials are set to determine damages for 70 other policyholders, all of whom had claims investigated by Haag.
In past court cases, judges have chastised and even fined State Farm for withholding records the company was ordered to produce. Evidence the company destroyed documents has been presented in several cases.
In the Oklahoma case, after State Farm finally turned over to the court a “claims legal research” DVD and other records, Judge Richard G. Van Dyck told company attorneys
“As I was watching these tapes I just want to say this for the record, the hair on the back of my neck did – did stand up because I was seeing things there that early on in this case I was told by (State Farm) defense counsel didn’t exist and couldn’t be produced. So I’m not real happy with that and I want to remind all counsel that their ethical responsibilities as attorneys outweigh the wishes of their clients.”
Gary T. Fye, an expert in the analysis of disputed insurance claims who lives in Nevada, often testifies in insurance cases. Fye, who said he has testified on behalf of policyholders and insurance companies, has provided the courts information on State Farm’s history of destroying and withholding records.
In 1998, Fye wrote in a Florida case
“I have been witnessing document destruction, concealment, and obstruction of discovery by State Farm for many years in connection with my review of internal claim practices documents of the insurer. I have accumulated certain Exhibits which show the company’s goals and objectives for document handling by its employees. The documents show close to 28 years of intentional destruction, concealment and distortion of claim practices records.”
In some cases, company executives did not keep records.
Jeff Marr, the attorney suing State Farm in Oklahoma, took sworn testimony Sept. 6 from Rust. Topics included Rust’s Chairman’s Council, made up of top State Farm executives. The group, which includes the company’s general counsel, meets quarterly.
Marr was fishing for records of those meetings that he could subpoena for his lawsuit.
“Certainly,” Marr asked Rust, “you keep records of the quarterly meetings where the entire Chairman’s Council is present?”
“We have an agenda,” Rust said, “but minutes in that, no.”
“Why not?” Marr asked.
Rust replied, “Never felt a need to.”
Marr later asked, “Are there any written agendas that are available should I choose to request them in the lawsuit?”
“I’m not sure what might be available,” Rust said.
Rust also said policyholders, who essentially own the private mutual company, are not entitled to know what the Chairman’s Council discusses or decides about litigation against State Farm, citing attorney-client privilege.
Marr questioned why the company would withhold information from policyholders, who own State Farm.
“Well, again,” said Rust (who has a law degree), “I’m not an expert in the area, but I think as you find – even if I’m a shareholder in a publicly traded company, there are things that are not – you know, I do not have access to.”
Marr later asked if policyholders have a right to see documents from State Farm’s investigation of Haag.
“No,” Rust said.
“Why not?” Marr asked. “Is it privileged?”
Rust said, “I believe so.”
The Sun Herald (Biloxi, Miss.).
We’d like them to be a good neighbor so long as they are a fair neighbor,” Gov. Charlie Crist said about McCarty’s prediction that State Farm will stay in Florida in a smaller form.
Font Size:Default font sizeLarger font sizeBILOXI, Miss. (MCT) – In some cases, State Farm’s top leadership prefers not to share or even keep records that offer insight into how policyholder claims are handled, according to court records.
TO THE UNTOUCHABLES. Edward B. Rust, Jr., will be happy to tell you that he is the Chief Executive Officer of State Farm Mutual Insurance Company. He has deep family ties to State Farm, as his father and grand father have both served in that capacity. He will also tell you that he is an educated man who has been to law school and is a past practicing attorney. In addition, he was the chairman of the Coalition for Excellence in Education and a member of George W. Bush’s transition advisory team on education. So with all of that education why will he not deal with his company’s inbred greed. Does he not know that we are in the 21st century where anyone can look on the internet and see the billions of dollars that are being spent to protect their empire from the consumer? In Utah, the company was fine $25 million in punitive damages, in part for the “systematic destruction of documents and systematic manipulation of individual claim files to conceal claim mishandling”. An Idaho appeals court fined the company $9.5 million in punitive damages for making use of “a completely bogus” outside bill review company that helped lower the cost of medical bills. In October of 1999, an Illinois jury rendered a $456 million judgment against State Farm and an additional $730 million in punitive damages for the insurer’s breach of contract with auto policy holders by relying on generic replacement parts. Rust was adamant in his insistence that fraud had not been committed. A class action law suit in the name of State Farm policy holders was filed in 2003 for breach of contract and statutory consumer fraud in which $1.1 billion was awarded to plaintiffs. When a company is misleading the public, should that not be considered fraud? A consumer would go to prison for that type of behavior. State Farm will let you know that, in several states, fraud and abuse is pushing up the cost of auto insurance. A court in late 2001 reached an unfriendly consumer decision that could have the effect of reaching deep into the pockets of the consumer. Sharply higher jury awards in vehicular liability cases are putting additional upward pressure on auto insurance rates. The average jury award in auto liability cases rose from $187,000 to $269,000 in 2000, an increase of 44%. I question if any of the lawsuits would be necessary if the company would just fairly pay their claims. The company represents on their web-site that consumer protection is one of their most important goals, but do they really think that courts would be awarding multiple millions of dollars in bad faith claims if that were their emphasis? State Farm’s ratings are based on their financial strength. State Farm states that their high ratings are also based on strong claims paying ability. With this ability, why is it necessary for their policy holders to allege that the claims department was directed, in evaluating their cases, to take them to trial instead of settling within the limits of the policy? This practice exposed policyholders to judgments above the limits of their policies, when the company was attempting to make an effort to win smaller decisions. Two former in-house attorneys for State Farm contend that they were often called upon by the insurer to represent its’ policy holders and were forced to commit “unlawful and unethical activities, including requiring the two to stay silent about the rights of the policyholders”. State Farm seems to have reckless indifference for the truth for the purpose of corporate and personal economic gain. State Farm should know that continued scrutiny of their claims paying practices will continue especially with the advent of new claims that are surfacing from lawsuits revolving around Hurricane Katrina. A message to Mr. Rust, and any employee of the company that is acting in bad faith for its policy holders. Its time to stop no more.
Is this Insurance Commissioner running scared that the homeowners companies run on thin margins.
If I had a dollar for every time a liberal wanted something to be fair.
Sounds like the playground, not business.
This is exactly how it will play out with private health insurers, when the federal government decides United Healthcare shouldn’t charge what they need to charge to make a profit…….people exit the market.
This is a PERFECT argument against Obama and the democrats alleged “health reform”…………….
Who cares????
What does it have to do with the state not allowing a rate increase?
Under your argument, of State Farm systematically screwing their policyholders, they would simply have required a LARGER INCREASE than they asked for, in order to make up for the additional claim payments.
THE LIBERALS ARE EITHER NAIVE OR NARCISISTIC. THE NAIVE ONES CAN BE GOOD PEOPLE, BUT THE NARCISISTS WANT TO BE WORSHIPPED, SO THEY DON’T CARE IF PRIVATE COMPANIES “PULL OUT” OR FAIL, CUZ THEN EVERYTHING WILL BE TAXPAYER-FUNDED, AND WE WILL NEED TO WORSHIP THE LEADERS TO GET FED AND HOUSED. WAKE UP, GOOD LIBERALS AND CONSERVATIVES ALIKE, BEFORE IT IS TOO LATE!!!
“. State Farm seems to have reckless indifference for the truth for the purpose of corporate and personal economic gain