In the wake of Hurricane Katrina, State Farm is baling out of the Mississippi market. Their motto, “Like a good neighbor, State Farm is there,” apparently no longer applies in that storm damaged state. From an AP story today:
State Farm: No new policies in Miss.
State Farm Insurance Cos. is suspending sales of any new commercial or homeowner policies in Mississippi starting Friday, citing in part a wave of litigation it has faced after Hurricane Katrina, a company official said Wednesday.
Mike Fernandez, vice president of public affairs for State Farm, said Mississippi’s “current legal and political environment is simply untenable. We’re just not in a position to accept any additional risk in this homeowners’ market.”
One has to assume this is related to State Farm getting whacked with a $2.5M punitive damage award for failing to honor their Mississippi policies. (State Farm should be used to punitive damages by now, having been hit before and finding the case go all the way to the Supreme Court.)
State Farm’s troubles are probably not helped by the fact that Senator Trent Lott is a State Farm policyholder that had to hire an attorney to recover on his own policy.
Apparently, State Farm finds its easy to collect premiums but isn’t all that thrilled about paying out claims. These are the types of “good neighbors” I can do without.