THINK WE CAN .com

State Farm, historically one of the finest insurance companies in the world, is being hijacked by a small group of people doing some very small thinking. Through the creation of tiny, separate companies that run the risk of going bankrupt in the event of a major claim, State Farm’s present leadership continues to carry out its plan to isolate those states of the U.S. that are most likely to suffer catastrophic losses.

Florida can be the state that stops these executives in their tracks and all of us can help—let me explain.

Having failed in its efforts to squeeze a massive rate hike out of the Florida Insurance Department, State Farm is preparing to cancel its entire book of homeowner policies covering more than one million Floridians. This action by the largest property insurer in the U.S. is the final act of a gambit designed to fatten their bottom line, while totally disregarding the terrible risks and costs to society—a style of business operations sadly resembling portions of Wall Street and our mortgage and investment banking industries.

Our problems with State Farm started a few years back when Florida lawmakers allowed the parent company, State Farm Mutual, to form what is called a “pup” company, State Farm Florida. Through the creation of this autonomous company, State Farm effectively raised an impenetrable iron curtain around Florida as far as the parent company claim payouts are concerned.

This iron curtain was not erected to keep us Floridians from getting out, but to keep any of State Farm’s main reserves of claim dollars from ever flowing in. If a major hurricane strikes Florida, it would be the tiny pup company that would be responsible for paying all claims. Many of us could lose our homes with no hope of recovery from State Farm Mutual, because we are not really covered by State Farm Mutual.

What is most startling is the boldness of State Farm’s ploy, for they are ignoring the most basic and sacred of an insurance company’s responsibilities—that of holding their insured clients harmless in the event of loss, especially massive loss, through the spreading of risk. That is the very definition of insurance: SPREADING THE RISK. And Florida is not the only state in which State Farm has formed a pup company.

Our potential for economic disaster will greatly increase when State Farm and other national insurance companies isolate more U.S. high risk areas such as major earthquake fault lines, high-risk flood areas, tornado zones, all hurricane prone locations, New Orleans, etc.  If we continue to allow national insurance companies to operate in this fashion, it is guaranteed we will soon find ourselves not knowing who is insured for what across the entire United States.

By the way, it appears that State Farm will be allowed to continue to sell their auto and other non-homeowner policies in Florida. This is called “cherry-picking” in the insurance industry and, while inherently harmful to insureds, it can be vastly profitable for the company, if we let them get away with it.

Well, after all that, we do have some good news. Our state senator from the 11th district, Republican Mike Fasano, has taken decisive action to rectify this situation through the introduction of two bills that will go a long way towards correcting State Farm’s un-neighborly behavior. Senator Fasano’s bills, while simple in concept, will block any insurance company operating in Florida from pulling a similar stunt in the future.

The first bill retroactively addresses our present problem by limiting the cancelation of any one type policy to no more than two percent of a company’s customers in a calendar year. If State Farm still feels like socking it to a million of us, it will take them 30 or 40 years to do so if this bill passes.

The second bill is the one that takes care of our future. It forces all insurance companies doing business in Florida to offer all the types of policies they sell in any state that borders Florida. This clever idea should completely and immediately solve the cherry-picking problem.

If you would like to support Senator Fasano in the passage of these bills, call or email your legislators. This link will help with telephone numbers and e-mails. This is one time all of us can do something positive in a matter that can become very harmful if left unchecked. The calls and emails will take a little effort, but this situation must be rectified.

Doing nothing will allow State Farm to reinvent the meaning of insurance, which promises dire consequences for not only Florida but the entire country. Furthermore, it is high time that we all do our best to bring to task those U.S. companies that have left too many of their morals far behind in their mad dash for ever increasing profits.