Mississippi fires back at State Farm

State AG will propose legislation to force insurer to write local policies after it tried to pull out following Katrina row.


NEW YORK (Reuters) -- Mississippi's attorney general said Friday he would propose legislation to force State Farm, the largest home insurer in the United States, to continue writing new policies in his state.

State Farm has said it will stop writing new policies for homeowners and small businesses in Mississippi following a legal battle over damage claims in the state from Hurricane Katrina in 2005.

Attorney General Jim Hood, at a press conference, condemned the company's decision, calling State Farm a "robber baron" and accusing it of "decadent actions" in Mississippi.

The battle between Hood and State Farm has become increasingly bitter since Jan. 26, when a federal court judge rejected a settlement between State Farm and 1,000 Gulf Coast homeowners with claims against the insurer dating from Katrina.

Insurers like State Farm, which insures more than 30 percent of Mississippi homeowners, previously said their policies did not cover damage from flood waters.

State Farm joins other insurers - among them Allstate Corp. (Charts), State Farm's biggest national competitor - that have also cut back in coastal areas. The others include American International Group (Charts), the world's largest insurer, and Nationwide Mutual, the parent company of Nationwide Financial Services Inc. (Charts).

Hood insists insurers are liable for hurricane damages regardless of the cause.

Hood said Friday that he had asked Mississippi Gov. Haley Barbour and Insurance Commissioner George Dale to issue emergency orders requiring insurance companies to continue writing home policies until the state legislature can act. He said he had not had any response from either Barbour or Dale.

State Farm immediately fired back, saying Hood was part of the problem.

"This is a remarkable response to what was just a business decision, but it does underscore the legal and political challenges faced in Mississippi," Fraser Engerman, a spokesman for State Farm, told Reuters. "We want to continue to serve our customers in Mississippi, but it seems some are intent on making that more difficult."

Engerman said Hood's actions "show just how unpredictable and untenable the current environment can be."

Hood said he based his proposal on recent legislation passed in Florida, which temporarily prohibited cancellation and non-renewal of homeowner policies until the new Florida insurance statute goes into effect.

Under Hood's proposed legislation, a company selling auto insurance in Mississippi, and both auto and home insurance in other states, would be required to also sell homeowner insurance in Mississippi.

State Farm has said it wants to sell auto insurance - but not new homeowner policies - in Mississippi.

Referring to the lawsuit between State Farm and Gulf Coast homeowners, which is now awaiting another hearing before U.S. District Court Judge L.T. Senter, Hood said one of his reasons for settling with State Farm was to keep the insurer writing homeowner policies in Mississippi.

"Mississippi should not allow State Farm to breach its promise and continue to profit from others in our state," he said.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.