State Farm stops issuing some policies

Published 1:28 pm Friday, February 16, 2007

State Farm Insurance still has plenty of business to do in Mississippi, company representatives said Thursday.

The insurer announced Wednesday it will no longer issue homeowners and commercial policies in the state of Mississippi until further notice.

The three State Farm agents in Natchez said they’d been asked to refer all questions to corporate headquarters.

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State Farm representatives have said the decision was due in part to the wave of litigation the company has encountered since Hurricane Katrina.

Phil Supple of the corporate media relations office said the decision is merely a suspension, and may not last forever.

“Our goal is to serve as many customers as possible,” Supple said.

“We sell a promise that if you have a claim we are going to be there. But we’ve paid 1.1 billion on Katrina claims alone.

“We knew what we were selling and we didn’t charge for floods.”

Supple said judges, lawyers and residents in Mississippi were expecting State Farm to pay for damage they don’t cover.

Policyholders on the coast have said damage to their home was caused by storm surge, not flooding.

Supple said the decision will likely affect business for agents, but won’t cripple it.

“It’s a hit, I’m not going to try to sugar coat it,” he said.

“And we don’t want to cause an additional burden to our agents, but we are looking at protecting the future environment for all our customers.”

Supple said agents still have 72 other policies to sell.

“There are a number of things for which they can shift their focus.”

Natchez Agent Terry Estes said he knew the Katrina-related decision was coming, but hadn’t heard any specifics before Wednesday.

He said he’s spent some time so far assuring his existing customers that nothing changes for them.

Though the company is not issuing new policies, the old ones are not affected.

Estes said he was a little worried about what the change means for his business, but said he was comfortable with the company.

“I wish they would get this resolved,” he said.

“But I trust State Farm. They’ve always been good. This is not the first time we’ve had to back up and look at some of the things that are happening.”

Estes and local agents Stuart Heflin and Kevin Whittington work as independent contractors selling State Farm’s product.

They are all self-employed.

Supple said State Farm would continue to review the situation.

“As we continue to watch the legal, political and business environments, we’ll be reassessing,” he said.