State Farm catastrophe claims for 2011 hit $5 billion
Through the first nine months in 2011, State Farm — the country’s largest insurer of homes and cars — has paid $5 billion in claims to repair, rebuild and replace property damaged in weather-related catastrophes. Consumer advocates say State Farm’s announcement isn’t bad news for policyholders, though.
The $5 billion figure accounts for catastrophes that have occurred in 2011 — including wildfires, tornadoes and hurricanes — as well as any lingering payments for catastrophes that happened before 2011.
|These are the remnants of a mobile home that was destroyed in a September 2011 wildfire in Leander, Texas.|
Thus far in 2011, State Farm has handled more than 970,000 catastrophe claims in more than 40 states and the District of Columbia. That’s on top of the 11 million to 12 million other auto, home and business claims that are reported to State Farm in a typical year.
“The unrelenting, widespread volatile weather continues to cause problems for our policyholders,” Brian Boyden, executive vice president of State Farm, says in a news release.
One problem that it shouldn’t cause for policyholders is rate hikes.
Recent catastrophes shouldn’t trigger rate increases unless those storms, fires and other disasters don’t fall within the parameters of catastrophe prediction models used by insurers, according to Robert Hunter, director of insurance at the nonprofit Consumer Federation of America. Rates for home and auto insurance “should stay quite stable,” Hunter says.
Eli Lehrer, vice president of The Heartland Institute, a nonprofit think tank, agrees with Hunter. The State Farm announcement “shows that 2011 has been a very bad year for catastrophes but that insurers have the resources — plenty of them — to pay claims,” Lehrer says.