Mississippi Commissioner Stops State Farm's Rate Increase, Wants More Answers

In a move that stops the immediate implementation of State Farm's latest request for a homeowners rate increase, Mississippi Insurance Commissioner Mike Chaney said he has asked the insurer for more information about its filing -- which could mean an increase of 45% for homeowners in the state's three coastal counties.

"I'm not going to approve this as it is," said Chaney of the rate filing. "I put them on notice to that fact so they could not use those rates."

Chaney said his office had 30 days to review State Farm's rate filing, which was submitted in early August. That time period was over the morning of Sept. 10 but the Mississippi Insurance Department had yet to finish scrutinizing the request. Chaney said he has asked State Farm 10-12 questions about the filing and when the insurer gets back to him with answers, "the process starts again," he said.

"The doors are open for negotiation," said Chaney, who said a public hearing on the proposed rates could be held soon. If the rate request is denied, State Farm has the right to appeal and Chaney has the option of taking the matter to the state Supreme Court if his decision to deny the rate is overturned. Or, "State Farm can accept my decision and come back with a different rate -- or pull out like they wanted to do a few years back," Chaney said.

David Majors, spokesman for State Farm, said the company is willing to work with the insurance department and will answer any questions it has. "We want to be cooperative," he said.

At the start of the year, State Farm announced it would resume selling renters insurance in most parts of Mississippi (BestWire, Jan. 30, 2009), and in June the company said it would write some new homeowners insurance policies in Mississippi after more than a two-year hiatus (BestWire, June 10, 2009). State Farm will not write in the state's three coastal counties of Hancock, Harrison and Jackson.

About a year ago State Farm was approved to increase rates a statewide average of 13.6% (BestWire, Aug. 22, 2009).

In 2008, the top five writers of homeowners multiperil in Mississippi, according to A.M. Best Co. state/line product information based on direct premiums written, were: State Farm Group, with a 26.3% market share; Southern Farm Bureau Group, with 15.5%; Allstate Insurance Group, with 12.0%; Nationwide Group, with 9.7%; and Farmers Insurance Group, with 6.0%.