Good Neighbors Until Something Happens..

Insurance is one of the greatest American rackets.  It’s almost as good a racket as these guys and these guys have.

Everyone needs to have some, life insurance, health insurance, car insurance, home insurance, dental insurance, long term disability insurance.  For those Americans that can afford all these money siphons, things usually go along fine as long as cash flows from individuals to insuring agencies on schedule.  Things go along fine, that is, until something happens.

Car accident claims, home damages claims, doctor claims, all increase the likelihood that premiums will go up and in more extreme cases, that the insured will be dropped from the ranks of the insured.  In essence –one pays insurance companies a certain premium amount for not having accidents, not having a home damaged by storm, not getting ill.  It’s a good gig.

One of my favorite insurance companies these days is State Farm Insurance.

Mississippi courts forced State Farm to pay way more than they wanted to for losses due to Katrina.  State Farm, like the good neighbors they are, had to be sued to stop them from low-balling claims and doing the old wind damage / flood damage mambo with Mississippi policy holders.  Mississippi – this is the state that in 2003 that was only one place behind West Virginia in the race for the Median Income cellar. It’s one of the poorest states in the country with a median income in 2003 of $32466.00.  It’s only good business to game the working class poor.  Low ball em and see if they can scrape together the will and the dough to litigate. 

Stung by the assault on its cash flow, State Farm has decided it doesn’t want to be good neighbors with Mississippians any longer.  They’ve decided to not write new policies in Mississippi.  Why would they?  They might actually have to honor policy holder claims in the future.  There’s rumblings that they might pull out of Florida as well, leaving a good chunk of Jeb’s peeps with the insurer of last resort – the state of Florida.  With a Bush at the helm – one can only imagine how that will go..

Don’t feel too bad though for the beleaguered insurance giant.  Since the dark year of 2005 (Katrina), and despite the “untenable” legal and political climate in Mississippi, State Farm Insurance Cos. Inc. has increased profits a brisk 64%.  State Farm ranks 93rd on Fortune’s Global 500 companies with $60.5 billion in sales and $5.3 billion in profits.  Not too shabby.

 

Comments

[Mary C.]

Funny you should mention this.

I was in Mississippi last week and met lots of people who never got anything from the insurance companies or from our government. One guy told me he almost accepted a lower payment but then would have been supoenaed to testify against his neighbors who were fighting the insurance company.