Dale: Tough task on my hands'

By By William F. West / community editor
Dec. 15, 2002
State Insurance Commissioner George Dale said State Farm's proposed 42.5 percent rate increase on homeowner insurance is inappropriate but he wants to seek a solution so the company will continue writing policies in Mississippi.
Dale said State Farm's rate increase request couldn't have come at a worse time with the weak economic conditions in Mississippi.
Dale said there is no specific percentage increase he would like to aim for in talking with State Farm.
However, he said Mississippi is not the only place where State Farm has sought rate increases.
He said that, while at a regional meeting of his fellow state insurance commissioners, he learned State Farm has received a 34 percent rate increase in Florida, a 33 percent rate increase in Tennessee, a 32 percent rate increase in Arkansas and a 21 percent rate increase in Kentucky.
Dale said his department has 30 days to approve or disapprove State Farm's request for a rate increase should the company file for one. He said if the rate increase is disapproved, then the company can appeal to a court in Hinds County.
Dale, while emphasizing his disagreement with State Farm's request, said is concerned about what would happen if the company said it was going to drastically cut back on writing policies in Mississippi.
State Farm's views:
In response to questions from The Meridian Star, State Farm spokesman Tyrus Sturgis, of Birmingham, Ala., issued the following statement:
The insurance industry as a whole, including State Farm, is feeling the effects of a convergence of negative trends. Claim frequency and claim severity both increased for property coverage, contributing significantly to industry losses in 2001. Escalating costs for water losses, labor and material for repairs, and catastrophe claims have all impacted the cost to provide insurance.
Another key fact is insurance rates have not kept pace with rising costs. Insurance companies are simply incurring losses and expenses that are far greater than the amount received in premiums. Above-average investment returns in the 1990s meant that the cost to consumers for insurance coverage could remain stable even when insurers suffered underwriting losses.
The recent economic turndown and subsequent reduced investment income magnify the impact of cost increases and premium inadequacies.
State Farm suffered a $50 million loss in its homeowners business in Mississippi in 2001. This means for every $1 State Farm collected in homeowners premiums, we paid out $1.51 in claims and operation expenses.
State Farm suffered an additional homeowners underwriting loss of $2.2 million through July of 2002 in Mississippi. This situation is not unique to Mississippi, and it is not unique to State Farm. This is an industry issue that is being faced in many jurisdictions across the country by a multitude of insurers.
We are working hard to reverse those factors we can control that contributed to the negative trends. Our focus includes rate adequacy, quality underwriting, and managing our expenses while making sure we continue to pay what we owe on individual claims.
We continue to provide world-class service to our customers as we take action to become profitable. Our financial stability is key to providing the unparalleled level of service our customers expect. State Farm currently has more than 160,000 homeowners policies in force in Mississippi, and approximately 205 agents in Mississippi.
The public forum provides an opportunity to present a business case for rate adjustments that will maintain our financial stability as a company in Mississippi, and explain the underlying causes for our rate request.
Our actuarial data clearly supports the request we have made of the Mississippi Department of Insurance, and the public forum allows us to share this data directly with the public.

Franklin County

Republican primary run-off election for county commission seats takes place April 16

News

Historic Roxy Theatre celebrates 75th Anniversary with upcoming entertainment

Franklin County

PROGRESS 2024: Veteran Spotlight – Mark Dunbar

Franklin County

Franklin County makes seven drug trafficking arrests

Galleries

Why Knot car show cruises into downtown Russellville

News

Get free weather radio at VFDs

Franklin County

PCHS FBLA hosts Little Miss Dream Girl Pageant

Franklin County

PROGRESS 2024: Veteran Spotlight – Johnnie Pounders

Features

Sam Warf: From Tennessee to the White House and beyond

Franklin County

PROGRESS 2024: Veteran Spotlight – Mousey Brown

News

Russellville First Baptist Church receives historical marker

Franklin County

PROGRESS 2024: Meeting a higher standard – Russellville High School JROTC

News

RCS BOE announces new superintendent  

News

Miss Dream Girl Pageant names winners

Franklin County

First Metro Bank hosts FAME Girls’ Ranch donation drive

News

PCHS holds annual Shelby Grissom Memorial Fashion Show

Franklin County

PROGRESS 2024: VFW Post 5184 – ‘No One Does More For Veterans’

Features

Supporting students’ futures

Features

Red Bay Garden Club discusses amaryllis planting

Franklin County

UA announces local students for fall 2023 President’s, Dean’s, graduation lists

News

School news

Franklin County

PROGRESS 2024: Veteran Spotlight – Troy Oliver

Franklin County

Appropriations bill passes, allots more than $3 million for new Russellville library/multipurpose center 

Franklin County

Franklin County Cattlemen’s Association names Cattleman of the Year 

x