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"GOOD NEIGHBOR" STATE FARM DROPS AUTO COVERAGE - No New WV Policies Written, Company Dropping Losers |
| (01/02/2003) |
| "Like a good neighbor, State Farm is there," is no longer true for West Virginia residents wanting to buy auto insurance. The state's largest insurer, insuring one out of every three drivers, has stopped writing new auto policies. They have also dropped Louisiana . The company "was not having profitable growth" in the state in the last few years, which a spokesperson blamed in part on lawsuits, stating "The legal environment in West Virginia is among the most difficult in the United States." However, a national consumer group said State Farm was "making threats to regulators and lawmakers as a tool to limit their own liability and accountability," to increase their bottom line. "This is the nation's largest insurance company trying to hold the state hostage," according to Doug Heller of the California-based Foundation for Taxpayer & Consumer Rights. Heller said State Farm is trying to recover billions of dollars it lost in the stock market by increasing rates and refusing to sell to new consumers, suffering from what some believe is poor management. Heller said insurers around America give different reasons for dropping, but their message is: Allow us to increase premiums or we'll drop out of the market. "In your state it's the court system, in Texas it's mold, in California it's high employee costs. When they have a tough investment year, they take it out on consumers, and blame it on something else." Heller said tougher regulation is needed, not tort reform. . "They can't just come in when the market's good and cherry-pick customers, and then leave." At least three insurers are refusing to sell new homeowners policies in West Virginia, State Farm, Allstate and Farmers Mutual. State Farm has about 30 percent of the state market, Allstate about 8 percent, and Farmers Mutual another 3 percent. Last year State Farm increased its rates by one-third for homeowners insurance in West Virginia. |
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