Feb 19, 2007
State Farm announced it would stop selling new homeowner and commercial property insurance in Mississippi after a U.S. district judge awarded a Mississippi family one million dollars in punitive damages in a Hurricane Katrina claim.
This is a company that made 3.9 billion dollars last year, increasing their reserves to 50 billion dollars, according to Mississippi Attorney General Jim Hood. Their reserves were never touched by Hurricane Katrina claims.
State Farm’s attempt to get out of paying for flood damage by claiming that the damage was due to the storm surge and not by hurricane-force winds was obviously too blatant this time. Their reaction, though, shows the real role insurance companies play – to take money from people under the guise of protecting them in case of catastrophe – but pay as little as possible when catastrophe hits.
State Farm is supposedly a “mutual” insurance company – something like a co-op in which the customers make the decisions. Their commercials say they’re “like a good neighbor.”
No, they are not very neighborly – they are just like all those greedy financial interests that sit on Wall Street.