State Farm Insurance Co. announced it would stop writing new auto policies in Louisiana, and would also request a 16 percent rate increase to generate more than $150 million to offset losses.
According to A.M. Best and The Times-Picayune, the company ceased writing new auto business in Louisiana June 18; it currently has some 1 million auto customers in the state.
State Farm spokesman Gary Stephenson reported that the company lost nearly $200 million in its Louisiana auto business last year.
The company has also requested a 16 percent rate increase for its Louisiana auto subsidiary, State Farm Mutual. Stephenson cited acceptance of unprofitable business and inadequate pricing of policies as major factors for making the request. Louisiana Acting Insurance Commissioner received State Farm’s request June 18.
State Farm’s rate increase is expected to be discussed during a July 17 hearing by the Louisiana Insurance Rating Commission (LIRC), which last month granted the company a 12 percent increase for its homeowners rates.
About a third of Louisiana’s auto policies are written by State Farm. The state’s second largest auto insurer, Allstate, has also requested a 19.9 percent increase on its homeowners and renters rates. The LIRC has deferred that request, saying Allstate needed to better justify another rate increase (it had been granted a 7 percent increase last November). The company plans to pursue the issue at the July 17 hearing.