Miss. AG Hood Attacks State Farm as ‘Robber Baron’
In a second press conference in as many days, Mississippi Attorney General Jim Hood came out fighting against a recent decision by State Farm Insurance Co. to stop writing new home and commercial property policies in the state.
“We’re looking a robber baron in the face,” Hood said. “State Farm is not a responsible corporate citizen.”
Hood’s attack prompted a State Farm spokesman to say, “We never intended to pick a fight.”
State Farm, which writes about 30 percent of the state’s homeowners insurance market, said it would continue to serve existing customers and would write auto policies but would no longer accept new home or business property risks due to what it believes is a difficult business and legal environment in the state.
The insurer recently lost a key case involving its handling of a Hurricane Katrina claim and was assessed $1 million in punitive damages. Also, in separate settlements, it agreed to pay about $80 million to end lawsuits filed by 640 policyholders and to pay an additional $50 million to reconsider claims of up to 35,000 additional policyholders.
Hood wants to keep State Farm from “cherry picking” the lines of insurance it wants to write. He proposed legislation that would require State Farm to continue writing new homeowners and commercial property policies in Mississippi if it wants to write other risks.
Hood also requested that Gov. Haley Barbour and Insurance Commissioner George Dale issue emergency executive orders requiring insurance companies to continue writing homeowners and commercial property insurance policies until the Legislature has had time to address his proposal.
“I call on Governor Barbour and Commissioner Dale to use their emergency powers to temporarily prevent State Farm from hurting its own insurance agents and Mississippi consumers,” Hood said.
Hood’s legislation mirrors a measure recently enacted in Florida.
Hood’s statements and proposal seemed to further convince State Farm that its decision was the right one.
“This is a remarkable response to a business decision. Today’s actions show just how unpredictable and untenable the current environment can be,” commented Fraser Engerman of State Farm’s corporate media relations department.
Hood, who is himself insured by State Farm, questioned why State Farm is curtailing its business across the entire state and not just in high-risk coastal areas. He said he feels the added insult is that State Farm is now discriminating against its Mississippi agents who face a loss of potential business.
Hood suggested State Farm’s decision was a surprise given recent talks to settle disputes with the insurer over its handling of Hurricane Katrina claims.
“One of the main reasons I settled our state court litigation against State Farm was to keep them writing homeowners policies in Mississippi, to stabilize our insurance markets, and to help our coastal residents and businesses rebuild,” Hood reiterated. “Mississippi should not allow State Farm to breach its promise and continue to profit from others in our state.”
State Farm indicated the decision was necessary for financial reasons.
“We did not come to this decision lightly,” Engerman said. “We hope the environment will improve.”