State Farm gets OK on rate increase
By By William F. West / community editor
Jan. 4, 2003
State Farm Insurance Co. won approval Friday to raise homeowners' insurance rates 19.9 percent for most of its Mississippi customers when their policies are up for renewal.
The increase was less than half of the company's request to raise statewide rates an average of 42.5 percent. Mississippi Insurance Commissioner George Dale said he didn't like approving the increase.
Dale said the agreement was reached Friday after days of negotiations with the Bloomington, Ill., company which is the largest insurer of homes in the state with about 160,000 policies.
While most State Farm customers will get a 19.9 percent rate increase, those in the three hurricane-prone counties of Hancock, Harrison and Jackson will pay even more 25 percent.
State Farm originally wanted to raise rates on the Coast 79 percent.
State Farm Public Affairs Manager Greg Geren said in a statement that the company would have liked for Dale's office to approve the full amount of the rate request.
Company officials have said State Farm has lost more than $100 million during the past five years. State Farm attributes its losses to catastrophe claims and increasing costs for labor, materials and repairs.
Company officials, led by Geren, tried to make a case for the statewide 42.5 percent increase at a Dec. 19 forum in Jackson. Instead, they faced criticism from angry citizens.
The forum marked the first time many people learned that State Farm's 42.5 percent proposed increase was a statewide average that included a 79 percent increase for the Coast.
Dale said that State Farm is maintaining zero growth meaning that for an agent to write a new policy, he or she has to lose a customer first.
State Farm said the rate increase will take effect April 15 for new policy holders. The company said the increase will take effect for existing customers after June 1 when their policies are up for renewal.
For example, Dale said, people whose policies expire in September won't be affected by the increase until that month giving them time to shop for lower rates at other companies.
