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In the past couple of days the largest home insurer in the US, State Farm, announced that it will stop writing new policies for homeowners and small businesses in Mississippi. 

Bob Trippel, senior vice president, explained, “It is no longer prudent for us to take on additional risk in a legal and business environment that is becoming more unpredictable.” Essentially, the gulf coast has emerged as an area of exorbanite risk where a cost far outweighs the potential benefits of doing business. As such State Farm is making a reasonable business decision to take their capital elsewhere.

Consequentially they could now face the specter of government compulsion as Reuters reports:

Mississippi’s attorney general said Friday he would propose legislation to force State Farm, the largest home insurer in the United States, to continue writing new policies in his state.

State Farm has said it will stop writing new policies for homeowners and small businesses in Mississippi following a legal battle over damage claims in the state from Hurricane Katrina in 2005.

Attorney General Jim Hood, at a press conference, condemned the company’s decision, calling State Farm a “robber baron” and accusing it of “decadent actions” in Mississippi …

Hood said Friday that he had asked Mississippi Gov. Haley Barbour and Insurance Commissioner George Dale to issue emergency orders requiring insurance companies to continue writing home policies until the state legislature can act. He said he had not had any response from either Barbour or Dale.

State Farm immediately fired back, saying Hood was part of the problem.

“This is a remarkable response to what was just a business decision, but it does underscore the legal and political challenges faced in Mississippi,” Fraser Engerman, a spokesman for State Farm, told Reuters. “We want to continue to serve our customers in Mississippi, but it seems some are intent on making that more difficult.” …

Under Hood’s proposed legislation, a company selling auto insurance in Mississippi, and both auto and home insurance in other states, would be required to also sell homeowner insurance in Mississippi.

State Farm has said it wants to sell auto insurance - but not new homeowner policies - in Mississippi.

Every proposition that the Attorney General has put forth now is an immoral threat to State Farm’s liberty. State Farm is entitled to the property they own by right. They earned the capital they have accumulated and therefore are entitled to venture it as they please and where they please. Mr. Hood did not earn it, he cannot order them what to do with it; Gov. Barbour did not earn it, she cannot order them what to do with it; the people of Mississippi did not earn it, they cannot order them what to do with it; it was the freedom of the State Farm that produced the service they provide and it is their right to do with it as they please.

The insurance that State Farm makes available to people in Mississippi, as well as all of the United States, was only made possible by them pursuing their own self interest and attempting to make a profit. The mind power that it takes to make a billion dollar corporation out of nothing is enormous. The exercise of free will and ingenuity that manifests itself in State Farm is a testimite to the power of the reason. But reason is a volitional faculty and does not function under compulsion. State Farm insurance was therefore a byproduct of the free market system; it would not have come from nothing to where it is today if it faced the constant duress of central planning.

And yet, Attorney General Hood is attempting to create such a business environment for insurance companies in his state and simultaneously expects them to continue producing insurance to individuals and small businesses. If successful in his agenda, Hood will soon find out the consequences of not allowing the rational mind to think freely–either State Farm will be forced to plunder its capital in the state or it will flee entirely from Mississippi. But no matter what we will see freedom and wealth of more than one party suffer. Not only will State Farm Insurance see its business freedom and bottom line reduced, but the people of Mississippi will simultaneously have their right to buy insurance from whoever is willing to sell it taken away and the supply of insurance available to them diminish.

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