Oct 7, 2002
Trumpeting that it lost five billion dollars last year, one of the country's largest insurance companies, State Farm, announced large rate increases to everyone they cover – homeowners, automobile owners, commercial properties, etc.
In Michigan, for example, State Farm raised home insurance by an average 32%. In Maryland, home insurance was up 25% and car insurance was up ten%. And the company stopped writing any new policies in Maryland in a kind of extortion attempt to force state insurance commissioners to okay more rate hikes.
State Farm is not the only insurance company to raise their rates. Over the last two years in Michigan, Nationwide Mutual Fire Insurance raises their rates by 23%, Safeco Insurance Co. of America raised their rates by more than 80%, Allstate Insurance raised theirs by 85%, etc.
State Farm, of course, claims that it "is costing us more in home building materials, labor and medical costs." In fact, insurance companies almost always lose money on their claims. But they more than make enough on their financial investments, or speculation, not only to make up the difference, but to make a tidy profit.
But – as we all know – the stock market is down, down, down. And since insurance companies were some of the biggest players in its run up – now they are swallowing some losses.
But, unlike workers whose 401(K) plans almost disappeared, insurance companies plan on making up their losses – by raising our rates.
No – they kept the benefits when the market was soaring. Let them pay the price now.