State Farm's Regulatory Resolutions and Concessions
In a post last September, State Farm Agents are Fighting State Farm for Economic Survival, I wrote:
"Again, for many different reasons, I hope McCarty and State Farm can work out a deal."
Maybe this song reflects how many of us felt about the contention between State Farm and Florida's Office of Insurance Regulation, and how many of us feel we should resolve our differences:
Of course, being the big, bad bully, State Farm threatened to leave Florida’s property insurance market because it wanted the ability to charge the highest rates possible, regardless of the effect on its customers. State Farm's antics in Florida reminded me of this song:
Of course, now that the Florida legislature leadership has declared rate war on its own constituency by attempting to deregulate the State’s property insurance market as I posted in Do Florida Legislators Think We Are Stupid?, I wonder if this song is most appropriate for those legislators and insurance lobbyists:
In a future post, I will list every Senator and Representative that supports this anti-consumer legislation and ask them to explain why they want your insurance rates to rise.
Chip, agree. I would like to see the voting records so please post.
On a subject related to the Dec 16th OIR announcement that SF was staying in FL, there seems to be confusion about the precise discounts that are going away. Per the Commissioner's Aug 6th 2009 letter to SF, voluntary discounts for claim free, home alert, and multiline were approved and would begin showing up in renewals after Dec 1st 2009. OIR predicted these 'voluntary' discounts would average 28.4% statewide. Furthermore, 'mitigation' discounts, a separate animal (and which only apply to policyholders who have upgraded their roofs and/or installed shutters) are still in effect.
I've seen unverified reports that mitigation discounts average 3-17%. I think that is a very low figure and anecdotal evidence suggests it is much higher - precisely why SF has attempted, but failed to eliminate the mitigation discount. I believe at one point SF spokesman Chris Neal admitted that the loss of revenue from the mitigation discounts is what primarily pushed SF towards insolvency - if you believe the SF stance.
So imagine my surprise when my local paper Florida Today (Brevard County FL) publishes a scathing editorial Dec 20th that blasts SF and announces that the MITIGATION DISCOUNT was killed as part of the agreement to keep SF in Florida.
I sent several emails to both the paper's editor and to OIR asking for confirmatory comment but I heard nothing back. Other papers got it right and only reported the 14.8% across-the-board increase.
Is this a common tactic to treat dissenters as persona non grata since I believe it would be VERY big news if the mitigation discount was suddenly rescinded? Over 250K FL households have been mitigated so this specific discount is an obvious bullseye for the SF lobbyists and the sheeple legislators who want to throw consumers under the bus. Keep up the good work Chip & Thanks. (from a concerned State Farm policyholder)
Mike,
Thanks for your kind private and public comments.
I appreciate you sharing your views and concerns.
You are right. State Farm wields a significant amount of political power. It has a huge agent force, a huge bankroll, and a lot of politicians that take its money from its very capable lobbyists. State Farm is a master at long term public relations campaigns and strategic manipulation of facts to suit its economic agenda. None of this is illegal, but it may not be for the common good.
It takes concerned citizens like yourself to raise the issues, write the letters, and participate in the process. Keep up the good work and do not let the rich and powerful corporations make our government only for them.
Chip, Whether it is Citizens, State Farm or the NFIP, the rates have to reflect the cost of doing business in Florida. Profit attracts the best whether it is an insurance company or a law firm. I would be interested in your honest opinion about the Florida insurance market and the right fix. The self-regulated environment of the legal field seems to be working well. Yes, I work in the industry. The legal professionals keep us insurance professionals in a very enjoyable and fulfilling career and I suspect most legal professionals appreciate a healthy insurance industry as well.