понедельник, 17 сентября 2012 г.

Farmers Insurance's Withdrawal from Texas Homeowner Policy Market Stuns Agents. - Knight Ridder/Tribune Business News

By David Kaplan, Houston Chronicle Knight Ridder/Tribune Business News

Sep. 26--For much of Wednesday afternoon, Farmers Insurance agent Shayne Saucier was taking calls from customers.

They had gotten the news that Farmers would not be renewing homeowners policies in Texas, and what Saucier was hearing from many of them was a sense of disbelief 'that a company this big can pull out of a market this big.

'I'm in a bit of disbelief myself,' he said.

About 60 percent of his business is homeowners policies and he is trying to find homeowners contracts with other companies for his customers, but 'nobody will do it,' he said. 'Everybody is saying, `We're at full capacity.'

'This will devastate me,' said Saucier, who is one of 2,000 Farmers agents in Texas.

Farmers' plan to not renew Texas homeowners policies beginning Nov. 11 will leave 700,000 customers scrambling for coverage and Farmers agents trying their best to help.

The state filed a lawsuit against Farmers claiming the company is overcharging customers and engaging in deceptive trade practices. Farmers also faced fines of up to $1 billion if it continued to sell policies using its current underwriting guidelines past Nov. 11. Farmers denies any wrongdoing.

When announcing its decision, Farmers officials said that terms and conditions ordered by the Texas Department of Insurance would wreck the company financially.

All other Farmers services -- automobile, flood, commercial, life, financial and umbrella -- are unaffected by the announcement.

Still, the decision is a blow to Farmers agents in Texas.

'It's a horrible day,' Farmers spokesman Mark Toohey said. 'But our backs were against the wall, and we made a business decision. We were bleeding to death in Texas.'

What makes the decision agonizing is the human impact, Toohey said. For example, Farmers has about 750 agents in Houston and each has a staff of about three employees. It is likely that some staff will be laid off, he said.

The one good thing, Toohey said, is that Farmers agents can go outside the company and 'act like independent agents' to try to place their customers with another homeowners policy insurer.

Saucier is not optimistic about finding other insurers, however.

'Nobody's chomping at the bit,' to write homeowners policies in Texas, he said.

Another local Farmers agent, Julio Garcia, finds himself in a somewhat better situation than Saucier's: The vast majority of Garcia's homeowner insurance policy holders have homes valued at less than $100,000, making it much easier to find policies for his customers.

But he, too, sees trouble down the road, once that market fills to capacity and cannot accept anymore policies.

Garcia, who has had a Farmers franchise near Willowbrook Mall for almost four years, believes the current insurance crisis will lead to an even larger problem for the Texas economy.

Realtors will find it difficult to sell homes because it will be hard for buyers to get insurance coverage, which means that home builders, title and mortgage companies would also suffer, he speculated.

Garcia's father was also a Farmers agent, and Toohey said that it is not uncommon for his company's agents be part of a family tradition.

Farmers agents are proud and dedicated, Toohey said, 'and if there's insurance to be found, they will find it.'

Saucier was supportive of Farmers saying that 'no company can stay in business and pay more in claims that they collect in premiums and that's what they've been doing for years.'

He expressed anger toward the state, believing that it singled out Farmers, and toward the media, maintaining that they helped create hysteria over mold concerns.

On Wednesday, Saucier was fielding calls from policyholders wondering if they still had coverage. He assured them and assuring policyholders that they were not being canceled -- they would just not be able to renew.

A former sales manager for a health insurance plan, he invested his entire 401(k) in his Farmers franchise in southwest Houston four years ago. His wife is pregnant with their second child.

He was caught off guard by Farmers' decision, he said, and believed the problems would be resolved.

Most other Farmers agents had also been hopeful, he said, noting: 'If you're a salesman, you have to be an optimist.

'I've been an optimist all my life,' Saucier said, 'until 12 o'clock today.'

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(c) 2002, Houston Chronicle. Distributed by Knight Ridder/Tribune Business News.