So, facing a state government that, by fiat, forces their fees lower and their coverage higher, State Farm is trying to exit the property insurance business in Mississippi, and the state legislature is considering legislation to prevent them from leaving.
Translation: You either play it our way or we're taking our insurance policies and leaving the state.
An entirely reasonable policy, if playing it the state's way isn't profitable.
Its not an issue of being profitable or not. Its an issue of making as much profit as possible.
This kind of attitude on the part of insurance companies prevails in other parts of the country as well. There is roughly a 300 sq. miles portion of this country that is not effected by storms, earthquakes, flooding, tornadoes or icing, and that's the only area where insurance companies want to write policies these days.
Why should they want to write policies if they aren't allowed to raise rates so that they can make a profit.
Why should they be allowed to quit a state because it doesn't meet their profit standards? In the past year, insurance companies are reporting bigger and bigger profits..........your capitalism at work. So I just checked to see what the average industry profit margin is currently for insurance companies like State Farm.......I believe State Farm is private so I couldn't get specific numbers for it. The average profit for insurances companies is nearly 14%; that's up from the 5 year average of 9.5%. Not too shabby......again, I don't think the issue is whether to make a profit or not but how much to gouge, I mean charge customers to insure the very maximum in profits. Mississippi is a poor state.....there ain't much gold for insurance companies there.
In any case your 300 sq miles comment is just silly.
Yes, you're right.......there is no such area. However, there are areas where claims are less than other areas. That's where insurance companies want mostly to be located.
You can get insurance in almost every part of the country.
Now but what about ten years from now? The business is getting less and less competitive in certain areas as insurance companies vacate those areas. Last year, State Farm unexpectantly announced to its Utah customers it will no longer right policies in the state. In some parts of CA its very difficult to get an insurance company to write even though the area isn't eligible for the special state insurance policy. FLA and the whole Gulf Coast is having problems. What's next? Tornado alley? |
