State Farm to stop writing some policies in Mississippi

Mississippi's largest homeowner insurer said Wednesday it has had enough of the "untenable" legal and political climate and is suspending writing new homeowners and commercial policies in a state still struggling to recover from Hurricane Katrina.

A spokesman for State Farm Insurance Cos. said the decision was due in part to the wave of litigation the company has encountered since the Aug. 29, 2005, storm. Mississippi is the latest state along the hurricane-vulnerable Gulf Coast to at least temporarily lose an insurer.

In Florida, several insurers have dropped tens of thousands of policies since the back-to-back storm seasons of 2004 and 2005, when eight hurricanes hit the state.

And in Louisiana, many insurers have stopped writing new policies along that state's coastline, said Amy Whittington, spokeswoman for the Louisiana Department of Insurance. However, Whittington said no company has made a blanket decision eliminating all new business in that state, which — like Mississippi — stretches hundreds of miles northward from the Gulf of Mexico.

State Farm has more than 30 percent of the homeowners policies and 8.5 percent of its commercial policies in Mississippi. The company said the suspension would begin Friday and continue until the business climate in the state is more palatable.

As far as its current homeowner and commercial policies in the state goes, the company said in a statement that it continues to assess its position in the Mississippi marketplace "to determine what further steps, if any, are necessary."

The suspension does not impact State Farm's financial services, banking products or automobile coverage in the state.

Mike Fernandez, vice president of public affairs for State Farm, said Mississippi's "current legal and political environment is simply untenable. We're just not in a position to accept any additional risk in this homeowners' market."

The suspension was not a direct response to any specific development in the litigation, Fernandez said. That litigation has included a recent federal jury's $2.5 million punitive damage award to a couple who sued State Farm for refusing to cover the Katrina's storm surge damage to their Biloxi home.

U.S. District Judge L.T. Senter Jr. later reduced the award to $1 million, though he said State Farm acted in a "grossly negligent way" by denying the claim filed by policyholders Norman and Genevieve Broussard.