I think it's worth pointing out that State Farm requested a rate increase to be able to cover the cost of claim payouts in Florida. If they are unable to raise rates to cover those costs, then there wouldn't be any money to pay to the policyholders for claims. If it is costing them $5 for every $1 they collect in Florida, there is no way to continue that.

I think it is worth pointing out that insurance companies requesting rate increases are apparently basing the amount of the request on what it might take to pay off all claims and still be profitable in each financial quarter: What did they do with all the money they collected for 20 years while there were no hurricane strikes? The concept of insurance is to spread risk over time and space - insurance companies no longer do either one of those. We shouldn't allow them to call their product "insurance".

I agree with your last statement 100% Chan. If you have an automotive or life insurance policy with state farm, thank them for being a good neighbor and take your business elsewhere. Perhaps if they see people jumping ship on other lucrative types of policies they may reconsider the decision to leave town. I'm all for them making their profits, but as Tom said above, they made profits early on and should spread their risk, not try to cover it each year. Otherwise, what's the point?

People seem to forget that State Farm paid out Billions of dollars in the last 5 years and now faced with the reality that they're losing $20 million a month and can't get a rate increase gives them no choice. If you ran this company what would you do?

Tim,
State Farm fought the state's refusal via the Dvision of Administrative Hearings. Even the Adminstrative Law Judge called State Farm's numbers "baffling" and unfounded. They want more profit -- plain and simple. Have you always taken billion dollar corporations at their word? Grow up.

Ed, if you had read the Judge's comments, their claim of losing 20 million a month is unfounded because:
1. They taxwise and liabilitywise are a part of State Farm Mutual, which showed a 3.7 BILLION dollar profit last year.
2. They funnelled 549 million in profits to State Farm Mutual for "reinsurance", which was shown to be a "sham" (the judge's own word for it), so their 20 million per month loss was more like a 25 million per month profit.
3. They give 13% commissions on no new sales, meaning the agents get 13% on each annual renewal even if tey don't lift a finger. That is more than other companies pay, even companies that actually work to get new business.
4. The parent company charged the child company for advertising on products that the child company is not even selling.

Heck, the judge's comments were 37 pages long in regards to the purposeful confusion tossed out there by State Farm in the hopes of getting a 47% increase rejection turned into a 67% increase.

A 4000 dollar policy would jump to 6680, or another 112 dollars a month on folks' mortgage payments in the middle of a foreclosure nightmare.

Business can make a profit, but it cannot expect the state to rubber-stamp unfounded rate increases.

I'm sorry but you all are missing the one major point in this "problem"-the Governement is trying to tell a private company how to run their business.
Whether State Farm Florida is funded by the parent company or on their own, at their current rate structure Florida poses a loss.
Why can't a company determine that a segment of it's business is unprofitable and make an adjustment accordingly?
The State is basically mandating that a private company MUST INCUR LOSSES to stay in the state.
Policyholders will be forced to find a new property insurance carrier RATHER than be given the option to seek out a new carrier if they are unhappy with the one that they have.
Wake up people, Government has no business in the private sector.
And God forbid there be a major storm when all that is left is Citizens and a large amount of smaller, less solvent, companies.

Insurance companies don't make money by taking in more via premiums than they pay out; they make money by investing the premiums before they have to pay out. They're not making much on their investments these days, so they go to plan B and raise the premiums.

While it is true that all companies are here to make a profit it is also true that they lie at every turn to increase it!

Example - In AZ several years back the insurance co.s got the gov to force a driver to have liability insurance. Everyone would agree that's not a bad thing right ?? Well unless you use the same logic rightwingnuts use - the gov has no place telling anyone what to do and it's a free market right ? WRONG !
If you own more then one vehicle you have to pay liability on EVERY ONE SEPARATELY even thou you can only drive one at a time. It's required by law - free market my A-- !

Anybody that claims we live in a free market at the corporate level is either full of spaghettiO's or they've told the same lies for so long they can't tell the difference anymore. We all know that all Ins Co's would rather pay a lawyer to cheat you out of monies owed then pay in full when ever possible !

Every year they don't have a disaster the more money should be put aside for the inevitable, constantly assessing their exposure and assuring funds for the coming pay-outs not taking huge bonuses and crying poor when disaster strikes.

The way American corporate laws are written is to transfer wealth from the working class to the rich and has very little to do with making Co's responsible for they're commitments. ALL Co.s will cheat everyone they can unless there are laws for biding it. When was the last time you heard some crook say "it's not illegal" yet we all know it was wrong ???