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Can State Farm Stop Riling Up Insurance Commissioners?

Blame it on hurricanes if you want, but State Farm can't seem to stop riling up southern insurance commissioners.

In the latest duel, Mississippi Insurance Commissioner Mike Chaney turned down a State Farm filing that would have raised rates for this gulf state's three coastal counties by a whopping 45 percent. The increase seems a bit excessive when people's incomes, at least according to the federal government, haven't risen at all.

Of course those same Mississippi counties were whacked by Hurricane Katrina in 2005, which caused more than $40 billion of damage in Florida and Mississippi, and devastated New Orleans as well.

Still, the specter of raising rates by almost half caused Chaney to go into anger management mode. "I am not going to approve the present filing," he told Insurance Journal, saying it was riddled with "serious issues." He added that he didn't like the fact that the country's largest home insurer didn't want to write new coastal business, its mandatory 5 percent storm deductible, and its failure to offer reductions if residents made their homes more storm-worthy.

The fight with the Mississippi commissioner is eerily reminiscent of State Farm's battle with Florida Insurance Commissioner Kevin McCarty. That battle will end with State Farm withdrawing from the Sunshine State, an event Florida Gov. Charlie Crist marked by saying, "Good riddance."

State Farm also had a contentious fight with Mississippi Attorney General Jim Hood and plaintiff's attorney Dickie Scruggs. That battle arguably ended in a draw. Scruggs went to jail, but former insurance-friendly Mississippi Insurance Commissioner George Dale was ousted after his fight with Hood, Scruggs and the state's anti-insurance contingent.

State Farm spokesman Roszell Gadson smoothes the situation over, saying, "we look forward to working with Commissioner Chaney in the future." He points out that while coastal properties in danger of hurricanes saw a big jump in rates, the rest of the state had a 3.9 percent increase.

Gadson claims the exposure and rates in Florida and Mississippi are very different and cautions against making comparisons. "State Farm remains committed to serving its Mississippi policyholders," he says.

Both sides undoubtedly hope he's right.

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