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State Farm Assures Louisiana It Won't Exit Other Gulf Coast States

Authorities in Louisiana responded to State Farm's announcement on January 27 that the company would withdraw from the homeowners insurance market in Florida by expressing...
February 3, 2009

Authorities in Louisiana responded to State Farm's announcement on January 27 that the company would withdraw from the homeowners insurance market in Florida by expressing confidence in the agreements they had reached with insurance companies on handling the state's insurance crisis, in contrast to the restrictive approach taken by Florida's authorities. State Farm says that it was losing $20 million a month on its property business in Florida because of state restrictions on rates that have made the company unable to meet rising costs. In mid-January Florida authorities rejected State Farm's request for a 47.1 percent rate increase.

Louisiana, however, has disbanded the rate-setting body that insurers contended was vulnerable to political pressure and has begun a program that provides insurers with millions of dollars in incentives to attract them to the state's market. Louisiana Insurance Commissioner Jim Donelon said that State Farm had given him advance warning of its announcement and explained that the company risked insolvency if it continued to operate in Florida. Donelon also said that State Farm assured him that the company was not considering withdrawing from the market in other areas along the Gulf Coast.

Louisiana Won't Mirror Florida Pullout (Baton Rouge LA Advocate 1/29/09)

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