State Farm's Power Play And Propaganda Ploy
State Farm is hard to figure out. They say one thing and often do another. When you finally get to the decision makers, there is usually some logic to why they do things despite disagreement from consumers or regulators. State Farm's announcement that it was leaving the Florida property market really has me wondering--"what's up?" From what I read and hear, I am not the only one.
The number of building policies affected is estimated to be between 800,000 and 950,000. Only Citizens Property Insurance Corporation insures more structures in Florida. Approximately 1.2 million total policies will be phased out by State Farm over two years. Under Florida law, State Farm has to file a plan to remove itself from Florida. Kevin McCarty, of the Office of Insurance Regulation, will then step into the picture to evaluate and investigate State Farm's actions.
McCarty has taken a very calm 'wait and see' attitude. Very smart. He knows that State Farm does not just announce leaving a market without a strategic plan in place to help its overall position throughout the country and in Florida.
State Farm is an extremely effective propagandist. State Farm's internal manuals make clear that it uses employees and agents to influence politicians and media representatives. It places snippets of information, some truthful facts and quotes with the media, trying to influence what it wants to be read and heard. It uses lobbyists and politicians favorable towards it to influence other leaders.
State Farm's business plan involves government action. It seeks regulations and laws favorable to it and which often support common interests with other insurers (Allstate and Nationwide) in the property and casualty business.
The people at State Farm in Bloomington -- not Florida -- that made this decision think about the ramifications of these important decisions in a very global context. They want State Farm to remain the dominant player in the personal lines insurance market, and use propagandists and lobbyists to make it so. When subtle propaganda does not work, it can also be a bully. It uses shock and threatening actions against those not in agreement.
McCarty should thoroughly investigate State Farm's true agenda and strategic desires through his ability to analyze the removal plan. A detailed investigation by his office may reveal the truth of State Farm's long term goals and uncover how it orchestrated this last action in the press and in Tallahassee. If State Farm truly has honest information in its internal memos and plans for its latest actions which suggest that it is in peril, it should have no problem allowing Florida to scan its computers verifying those facts.
Until then, we will hear sob stories about the Sate Farm agents and employees who are being hurt. We will hear stories about the poor policyholders (I am one of them) that will be forced to look for insurance. We will hear cries that Florida regulators forced this decision because they are unfair. We will hear every excuse in the world through a stream of public relations media ploys that are simply propaganda intended to convince us to accept the power of State Farm.
It has a lot of power because it has an army of people it financially supports to carry out this mission.
Corporations only exist because humans allow them to. These fictitious entities, by law, are generally under state charters requiring them to promote social welfare as well as profit. Because they never die, these fictitious entities can accumulate vast wealth which can then be used to influence how government and society should be run.
Power is vested in State Farm because laws exist which allow fictitious, non-voting entities to contribute to politicians and lobby human leaders. State Farm is openly challenging our leaders at this very moment through its announcement. It will use all its power and propaganda to get what it wants regardless of whether it is in the best interests of policyholders, agents, employees and people in general.
God bless Kevin McCarty and other strong leaders caring for us. State Farm does not worry about God because, unlike the rest of us, it is never going to heaven or hell.
After reading the State Farm blog, it seems that Kevin McCarty needs to do a little "electronic discovery" to find out exactly what the upper level decision makers are really (thinking) doing... That would be some interesting reading.
Great post, Chip! All you said has been very evident at the Capitol this week.
It's a shame State Farm is willing to use its agents as hostages - and, in light of your comment, a "sin" to try and pin the blame elsewhere.
A friend of mine inherited his father's agency and has his own son working with him now - two generations investing a lifetime in State Farm and a third generation willing to do likewise - and for their loyalty and investment, they are rewarded with conduct that reflects on their integrity and betrays their trust.
Hell probably isn't good enough.
Laura,
The only way he is going to get the truth is to ask for the elctronic emails between the Executives at State Farm that made this "crafty" annnouncement.
It will be a fight because the way State Farm now works is to have in house counsel, or even outside counsel, sit in these face to face or electronic meetings and discussions. State Farm will claim that the truth is "hidden" under the guise of the attorney-client privilege.
He should ask for those electronic documents and fight to get them all.
Chip
Nowdoucit,
Whether you are in Jackson, Austin, Tallahassee or Washington, D.C., it is a shame how far the insurance industry will go to further its agenda. People and our leaders have to understand how sophisticated and influential the public relations departments and lobbyists are of the large insurance companies.
For example, the Chamber of Commerce today is largely a propaganda "mouthpiece" for the insurance industry when it comes to issues of insurance. When I tell my business clients how the Chamber merely parrots what State Farm and other insurance industry lobbyists cannot do under their own name, they become enraged that their dues are being used for social insurance propaganda.
When people and government leaders see "Chamber of Commerce" and "insurance" in the same sentence, they need to understand the insurance industry is what is speaking and using the Chamber as its surrogate and pawn. The insurance industry then tries to spin the need for insurance change in a way that sounds good for business when it is just the opposite.
In Florida, I think our Governor and others are starting to get the picture.
Chip
Not many people know that our Gov. used to be an ins. def atty. so of all the people in the world, he should have a GREAT PICTURE of what's going on.
You know, i live blocks from the water near MacDill AFB and State Farm canceled the flood part of my Homeowner's policy a couple years ago - not the Homeowner's - just the Flood portion. So they're picking and choosing how they want to take my $ and now they're threatening this. It's enough stress in the world for a single mom already than to wake up and see on the front page of The Tampa Tribune...STATE FARM PULLING OUT OF FLORIDA (or words to that effect). Another problem (which shouldn't be a problem) to worry about.
And as far as S. Farm agents go, I've had the same Agent for over 15 yrs - yeah, I feel bad for him and can empathize for him and his secretaries if State Farm kicks him to the curb, but, unfortunately, in today's world, it's becoming more and more callous and people are caring less and less about each other - that's the advantage of being a corporation too - they also don't have FEELINGS.
I feel bad for my agent and his secretaries. Will State Farm feel bad? I DOUBT IT.
Shirley
Shirley,
Great memory.
Governor Charlie Crist briefly represented State Farm about twenty years ago. He worked with Emory Wood in Tampa. We had a case opposing one another.
I do not think State Farm is too happy with him today.
Chip
Very great post.
Steve,
Thanks.
I will also post the relative documents leading up to State Farm's announcement as well as the production request later today and try to get a post on my views of those over the weekend.
Chip
Good I'll be sending your post (and any future post) on the subject out to the political and business leadership of the Mississippi Coast so we can better lobby our state. While our political landscape differs from Florida's, the tactics State Farm uses are the same. We have learned from trial and error exactly what your post teaches.
So any help along the political strategy lines will be put to good use and will go a long way in helping government work better for society. Thank you Steve
Steve,
I have written that I am really bad at politics. I tend to lead with my chin thinking that eveybody is on the same side of good. Some lobbyists and politicians are out of some fictional world where, if you smile and nod your head in aggreement, it is acceptable to lie and do whatever you want.
Money is what makes politics work for insurance companies and large corporations. Insurers retain very sophisticated public relation companies along with lobbyists that "spin" media positions so that paid for politicians can sustain laws favorable for them. This is all legal under our current system.
I commend you and others standing up for the public good. You have a considerable fight. But, I truly believe that if we fail to participate in our own democracy then we allow others determine the type of society we live in. Everybody, rich and poor, can make a difference if they will just try and stand up to these financial giants.
Chip
State Farm is already too expensive. I hear from people that they have thousands of people at their Bloomington, Illinois headquarters collecting paychecks and doing nothing.
My mothers truck was broken into 2 weeks ago (window dash and radio stolen and broken.) I was told to take the truck into a window shop to have the window replaced asap because it was going to rain that day, she told me to pay for it and that state farm would reimburse us for it in the claim, now they say we paid to much for it and are holding up our whole claim because the company that did the window will not give them there book work telling state farm what they paid for the glass.
State Farm was screwed by the state of Florida. Plain and simple.
When the hurricanes arrived SF paid EVERY claim. They had to borrow money from the Auto Insurance Company in order to pay them but they paid all of them. Other companies were not funded enough to pay all of their losses and declared bankruptcy. THEN the state of Florida required all of the solvent companies the largest of which was State Farm to pay the claims for all of the deadbeat companies that could not meet their contractual obligations.
Why would any company pay for claims that they never collected a dime for in premiums? Florida has no one to blame except the idiots that run the government in Florida.