Farmers Insurance kills all its agents. 28,500 Auto and Homeowners insurance customers next in line, beginning April 1.
Time to start getting quotes for new insurance if you are a Farmers Insurance customer in Louisiana . . . or be prepared for higher rates if the Insurance Commissioner bows to the pressure Farmers is applying in the wake of a recent rate increase denial. Farmers is actually a very small player in Louisiana, so it's not going to hurt that many folks other than their own agents who will have to look for other insurance companies to represent.
Oh, Susana, it sucks to be a "captive" agent sometimes, with or without the banjo on your knee.
The following hot news story comes from AMBest.
Farmers' Branded Homeowners and Auto to Leave Louisiana Due to 'Significant Losses'
BATON ROUGE, La. - Farmers Insurance Group is not renewing its Farmers' branded homeowners and automobile business in Louisiana beginning in April, but the group's other brands in the state, like Foremost Insurance, 21st Century and Bristol West, will not be affected, according to a Farmers spokesman.
About 28,500 total policies from the Farmers Insurance Exchange will be impacted by the nonrenewal decision, which spokesman Mark Toohey said was made because "we've had some very significant losses in that book of business." Toohey said homeowners policies account for about 80% of that figure, with auto making up the balance. The nonrenewals will begin in April and will continue as a rolling process as the policies expire. Toohey said Farmers has been discussing and working with the Louisiana Department of Insurance to implement the plan.
Still, other Farmers subsidiaries in Louisiana are committed to the state and have more than 100,000 policies there, Toohey said. He said the company remains interested in those businesses — like Foremost's mobile homes business, and 21st Century's auto business — and wants to grow them. Toohey said Foremost has about 30,000 mobile homes insured in Louisiana.
Toohey noted the Farmers brand has never been a large player in the Louisiana market, because it wasn't one of the states in which the company traditionally operated. Farmers Insurance Group, which contains data for all of Farmer's subsidiaries in Louisiana, in 2011 held 4.13% of the homeowners market, according to BestLink, A.M. Best Co.'s online financial system. That figure has been steadily declining in the past five years, down from 5.8% in 2007. The group in 2011 wrote $65.8 million in Louisiana homeowners direct premiums.
Farmers Insurance Group in 2011 had 1.28% of the Louisiana private passenger auto market and that figure has also been steadily declining in the past five years, down from 2.75% in 2007, according to BestLink. In 2011, the group wrote direct private passenger auto premiums of $42 million.
Farmers Insurance Exchange has been denied for the last two homeowners rate increases it requested in Louisiana, according to state records. The exchange in April 2012 sought 39% increase to its Louisiana homeowners book, which would have had a premium impact of $11.2 million (Best's News Service, April 11, 2012). The company at the time of the April 2012 rate request, told Best's News Service it needed the increase because of "overall claim costs caused by fire and volatile weather events." In January 2010, Farmers had requested an 18.3% increase, which would have had a premium impact of $10.2 million.
Farmers actions come as State Farm is examining its position in the Louisiana homeowners market. State Farm, which is the largest homeowners insurer in the state, was recently denied a 16.6% rate increase (Best's News Service, Jan. 29, 2013). A State Farm spokesman at the time said the company needs the rate, in part, because of ongoing severe weather costs. Louisiana regulators also shot down State Farm's proposal to implement a regional homeowners storm deductible insurance program (Best's News Service, Jan. 25, 2013).
Louisiana Insurance Commissioner Jim Donelon told Best's News Service he denied the State Farm rate increase request, partially because of concerns over the size of the increase (Best's News Service, Feb. 7, 2013). Donelon was not immediately available to speak about the Farmers plan.
Most Farmers units currently have a Best's Financial Strength Rating of A (Excellent).
The top five writers of homeowners insurance in 2011 in Louisiana were: State Farm Group, with market share of 28.9%; Allstate Insurance Group, with 13.09%; Liberty Mutual Insurance Cos., with 6.7%; Louisiana Farm Bureau Mutual Insurance Co., with 5.94%; and American Strategic Insurance Group, with 4.17%, according to BestLink (www.ambest.com/bestlink).
Posted: Tue Feb 12, 2013 09:17 am Post Subject:
This is simply a foreshadow of things to come in health insurance. When the insurance companies cannot make the kind of profit that makes them feel comfortable, and are then denied rate increases that look too large, they will do what any business would consider doing . . . going out of business.
If you think it's fun to steadily lose money as a business owner, raise your hands. If you are a politician who thinks the only answer is raising taxes/revenue to pay for stupid programs, file your nomination papers. If you are a registered voter with an ounce of common sense -- the good Lord gave you a lot more than that when you were born -- vote every incumbent out of office at every level of government . . . and don't vote them back into some other position either. It's time to eliminate the career politicians who are ruining America.
When Obamacare becomes fully entrenched sometime after 1-1-2014 (probably in two or three years after that), and insurance companies are not making profits in health insurance, one by one, they will leave the market, until only the federal government is left to hold the bag containing the money to pay hospitals and doctors. The single-payer system that most people really do not want -- and which the Democrats were too weak-kneed to enact in 2009 or 2010 -- will become a reality. Then the rest of us are doomed.
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