02/08/2025
In a state ranked as one of the top places to do business, what motivates the false claims behind the push to hurt consumer rights? Insurance company greed.
The governor says the proposal will attract business to Georgia, but no business I want. Families who lose a loved one or whose breadwinner is hurt and loses income due to negligence of others or foreseeable violence are the ones who will be hurt. No matter how dire the economy, I know of no one who is so desperate for work that they want businesses in this state that hurt their neighbors just because they can get away with it. “Come to Georgia: You Can Hurt Our Citizens and They Won't Be Able to Do Anything About It” is hardly the slogan we should be using to attract any business we should want.
Those who don't know history are bound to repeat it. In the early 2000s when MedMal insurers claimed wild verdicts were driving huge premium increases and pushing doctors out of needed practice areas, it turned out that the insurers had knowingly grossly underpriced their premiums to grab market share after which the stock market tanked, killing insurers' investment income. Combining underpriced premiums and low investment income made for bad times for the insurers despite absolutely no evidence of abnormally high claims. What do they do? Use blame on trial attorneys to cover the slashing of the rights of those who are already hurting.
In no less of a source than the Wall Street Journal with an article today you can see that continues. The article shows State Farm did the exact same thing for homeowners insurance in California as med mal insurers did years ago. Using unrealistically low premiums, they went on a massive marketing spree to grab market share. "For years it sold policies at premiums it knew were unsustainably low — which allowed it to dominate market share. ... State Farm itself knew its rates were too low for the level of risk it was taking on — and that the risk could overwhelm the company."
When claims from underpriced policies came home to roost, State Farm channeled Casablana's police captain's feigned surprise ("Gambling at Rick's? I am shocked!"), demanded a 20% premium increase in 2023 from regulators due to the completely normal and predictable, er, "unexpected high" claims. They ramped up pressure on the regulators with an announcement that it was cutting off 30,000 homeowners and would cut more without the rate relief. SF got the premium boost, but came back for 30% more in 2024, and filed a request for an additional 22% rate increase this past week.
State Farm, according to the Wall Street Journal, has a surplus of over $100 billion. $100 billion.
But they are stretched? Not even close. And note that the company even carved off California and Florida in its corporate structure to insulate that pile of cash from the claims arising in those places.
At any rate, here is the WSJ article describing the California misadventures of State Farm that the company will doubtlessly try to blame on trial attorneys. Thanks for all you are doing in our leadership to shift this narrative and protect our clients.
The insurer aggressively grew in Los Angeles, despite getting overweight on fire risk, but decided to cut thousands of policies last year, adding to the state’s home-insurance crisis.