February 04, 2010
State Farm Is There Until You Need Them

Does anyone know how the Democrats’ health care reform package proposes to prevent the insurance companies from pulling a similar scam?

The largest homeowners insurer in Florida is canceling the policies of 125,000 of its most vulnerable customers beginning Aug. 1, halfway through the 2010 hurricane season.

The company, State Farm Florida, began sending out cancellation notices this week to nearly a fifth of its 714,000 customers, most of them in the state’s hurricane-prone coastal regions.

A spokesman for State Farm said the decision was the direct result of its failure to win a 47.1 percent rate increase from state regulators.

State Farm stopped writing new policies and sought the increase a year ago, saying severe losses from a series of devastating hurricanes in recent years had rendered its business model unworkable. It said that without the large increase, it would be insolvent by the end of 2011.

Suppose there’s a couple of bad flu seasons. Then the next year the insurance companies, one by one, no collusion here, begin demanding 50% rate increases for health care insurance policies, and end up negotiating a deal with the relevant government merely to cancel the insurance of a fifth of their customers. As long as they don’t cancel you for pre-existing conditions or because you’ve hit some lifetime limit, they’re good, right? We can’t force the companies to stay in business, at least in the current environment.

And of course there’s about three-quarters of a million Americans going bankrupt each year at least in part because of medical bills despite having health insurance. What do the Democrats propose to do about this?

They appear to have failed entirely at the one project they set themselves for this year, thus yielding what the Village Voice called a 41-59 majority for the Republicans.

But there’s a positive side, it appears.

David Miller, president of Brightway Insurance in Orlando and Jacksonville, saw a silver lining to the announcement. Spreading State Farm’s customers around to other companies will make the homeowners insurance market more competitive, and the canceled State Farm customers will likely get a better deal from their new insurers, he said.

“I think when they go to shop … they’re going to find that there are actually some tremendous savings, and this could end up being a blessing in disguise for many people,” Miller said.

Which makes sense. Insurance salesfolk are known to lend a sympathetic ear and policy to people in need.


Posted by Chuck Dupree at February 04, 2010 01:38 AM
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In 1992 or 1993, there were catastrophic hail storms in central FL. I had barely been able to get work as a temporary receptionist with the "catastrophe team." Gulf war sent me insane for two or three years.

One of the six top people in Allstate was supervising the settlements.
When he cycled back home in a month, he gave me his laptop and the passwords for his access to central Allstate in, I think, Chicago.
Allstate was screaming publicly "We have to have a rate increase."

I was bored and signed into the main frame at Allstate Headquarters and looked up the total of the payments. Then I accessed the revenue for the previous year. Allstate paid out less than 1 months premiums for the storms.

I worked for them for four or five months until I had enough cash to get the hell out of Florida. When I told them that I was leaving, they offered to give me a written contract that if I worked as an adjuster in the field for 1 year, they would make me President of North Florida Allstate. Insurance companies and banks are as bad as possible. Hire a documented crazy Nam vet? Even after I told them I was going to have to file bankruptcy because of my enormous credit card debt, they still asked me.

The truth is that I saved them well over a million dollars by refusing to cut checks to bad auto body shops and I had been a roofer so I knew what could be fixed and what had to be replaced.

When things slowed down I would go into the medical insurance for accidents and pull files for review. The number of people that I called and asked to go to a legitimate radiologist was incredible. Homopathic doctors could have an unregulated xray machine that they used to take every possible xray.

What I called "glow in the dark" medicine. Yes, I had managed radiologist practices and MRI setups, so I did know what I was talking about.

Posted by: Less is better on February 4, 2010 1:53 PM

I'd hire you for that job, Less. You are obviously saner and more prudent than, say, anybody on CNBC. You certainly have diverse career experience that would be valuable to any casualty or health insurer in need of claims management.

Posted by: joyful alternative on February 6, 2010 9:26 PM
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