State Farm is a tenacious opponent. "If you at first you don’t succeed, try, try again" is a motto which must be emblazoned in bold letters somewhere in its Bloomington, Illinois, headquarters. But, down in the Sunshine State, some are criticizing State Farm for its creative methods of raising rates.
The St. Peterburg Times and Florida Today have written highly critical editorials regarding State Farm’s announcement that it would cease all discounts for policies issued in Florida. The Times editorial stated in part:
"…Now the state’s largest private property insurer wants to pick the pockets of its customers one last time as it flees the state. Florida Insurance Commissioner Kevin McCarty should not allow that to happen.
The Florida subsidiary of Illinois-based State Farm informed regulators Friday that it wants to trim nearly all of its discounts for homeowners insurance. The changes would eliminate discounts for customers with multiple policies, for those who have hardened homes against hurricanes and even for customers who have been claim-free for years. State Farm’s message: We don’t care if you have been loyal or invested thousands of dollars to mitigate hurricane losses after the state required premium discounts in return. Just give us more money before we drop you."
Florida Today points out how customers cannot trust State Farm to hold a promise for a small decrease in rates once they harden their homes at great financial cost:
"Reducing or eliminating discounts for homeowners who mitigate against potential storm damage such as by hardening garage doors or installing shutters. The giant insurer was one of the biggest backers of mitigation discounts as one way to ease the insurance crisis in the state after the bad storms of 2004-05.
State Farm also wants to gut longstanding discounts for multiple policies, installing burglar alarms or never having filed a claim."
It also called the recent rates requests by State Farm a rip off:
"Keep in mind State Farm is a lucrative operation, pocketing $5.5 billion in profits last year.
And that, despite being granted a 52 percent premium rate increase in 2006, it’s threatening to leave Florida, dumping 1.2 million policies statewide if regulators don’t allow more huge and unwarranted hikes.
Insurance Commissioner Kevin McCarty should make sure this latest shady tactic to rip off consumers is rejected too.
For its part, State Farm should drop plans to abandon faithful clients and start playing by the rules. That means submitting reasonable rate increase requests based on independently verifiable risk models, not rigged numbers."
I have to give State Farm credit for its "never give up" attitude. Some, like Slabbed, may suggest what this insurer has failed to give up is an unwavering attitude to generate as much revenue as possible for a product that expenses as little as possible. As I indicated in an earlier Post, this may be a company that has simply forgotten that the insurance business is unique in that its purpose is to serve the public trust rather than private gain.
