Since my esteemed colleague and fellow blogger is posting one side of the State Farm issue, I’ll show you the other. First, let’s look at State Farm’s Katrina shenanigans in Mississippi. The State’s Attorney General went after them there.
January 23, 2007
State Farm has agreed to pay thousands of Mississippi homeowners hit by Hurricane Katrina likely hundreds of millions of dollars in a landmark settlement that’s expected to reverberate across the storm-ravaged Gulf Coast.
The company agreed to a deal under which it will reopen thousands of homeowners’ claims and is likely to pay as much as $500 million, Mississippi Attorney General Jim Hood announced Tuesday. There’s no cap on the payout. The insurer will have to pay at least $50 million under the deal negotiated with the Scruggs law firm, which represents the majority of Mississippi homeowners who sued State Farm.
In a related development, State Farm will settle more than 600 individual Mississippi homeowners’ Katrina claims for roughly $80 million, according to a person with direct knowledge of the negotiations who didn’t want to be named because the settlement is confidential.
The settlement applies only to Mississippi homeowners — not to the thousands in Louisiana who are suing State Farm and other insurers, arguing that wind and rain ravaged their homes. Homeowners’ policies cover wind and rain damage, but not flood damage, which is covered by federal flood insurance.
Homeowners could begin receiving insurance checks within a few weeks, after the class-action settlement is approved, as expected, by U.S. District Court Judge L.T. Senter Jr. As part of the agreement with State Farm in Mississippi, Hood agreed to drop a criminal probe against the insurer related to its claims-handling process.
Then there’s this unbelievable announcement not even two months later:
March 7, 2007
State Farm Insurance’s chairman and CEO received an 82 percent raise after the company posted a record profit last year, a statement from the Bloomington-Ill.-based insurer said this week.
Chairman and Chief Executive Officer Ed Rust Jr. got a $5.26 million raise. He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million, the statement said. Rust made $6.4 million in 2005 and $5.5 million in 2004.
The absence of a major catastrophe helped the insurer generate a record $5.32 billion profit last year, compared to $3.24 billion in 2005 when Hurricane Katrina hit the Mississippi Gulf Coast, release said.
Did you catch that? State Farm made a $3.24 billion profit and their CEO made $6.4 million as they were wrongfully denying Hurricane Katrina claims and being criminally investigated for the handling of those claims.
I’ve long since dropped all of my policies with State Farm.
So I, and many other former State Farm policy holders say: You go, Governor. Good riddance to bad rubbish and don’t let the door hit you on the way out, State Farm.
Who needs insurance from a company that is investigated criminally and sued by homeowners to get legitimate hurricane claims paid?