By WLOX Staff
JACKSON, MS (WLOX) - Mississippi Insurance Commissioner Mike Chaney announced Monday that he has approved a rate increase for State Farm, although it is lower than the company originally requested.
"As Commissioner of Insurance, I have denied the August 10, 2009 State Farm rate request for the lower three counties of Mississippi that exceeds 45 percent, however, a lower rate increase has been approved," Chaney said in a statement to the media. "State Farm will see a 19.5 percent rate increase in the lower three coastal counties. The revised rate increase balances the need for affordable rates and sustainable premiums for policyholders in the face of rising costs to companies.
This increase, coupled with an increase affecting non-coastal areas earlier this year, yields a total average increase for the entire state of approximately 10 percent. To limit potential future increases and ensure rate stability in catastrophe-prone areas, the law allows insurers to charge consumers a reasonable rate.
I would have preferred that there be no rate increases at this time, but our role is to make sure the rates requested are not excessive and are justified and actuarially sound. I believe we have fulfilled that role.
My agency has been very aggressive in regulating insurers but more rate increases from other insurers could be coming soon. This is not the end of it. It's not just Mississippi, either. These rate increases are affecting all states with coastal areas.
I want to emphasize that the department has no legal authority to prevent termination of wind coverage by companies. Since State Farm did not get the full, requested rate increase, I have very grave concerns that State Farm may review wind coverage and non-renew or terminate existing wind coverage, which may force some consumers into the state-run wind pool.
I also am very disappointed that State Farm will continue their plan of not writing new homeowners coverage in the lower three counties of Mississippi. "
State Farm released a statement of its own Monday night.
"State Farm is disappointed that we were unable to achieve rate adequacy in the coastal areas, and that Commissioner Chaney was unwilling to allow us to implement our needed rate," David Majors with State Farm Public Affairs said.
"We will begin implementing the agreed rate on January 1, 2010 for new business and February 1, 2010 for renewals. This rate change will provide us the ability to more appropriately balance the risk with ensuring our ability to continue to serve our policyholders along the Gulf Coast and throughout Mississippi."