State’s Property and Casualty Companies Hold Ground

Unlike health insurers in Arkansas, the state’s property and casualty companies held their financial ground in 1999 and gained a few extra premium dollars.

That was mostly good news for Arkansans who paid the same or less to insure their autos, houses and office buildings against calamity.

Now executives of the companies writing the bulk of property and casualty business in Arkansas say that kind of good news may be over, at least for now.

Effective July 1, State Farm Mutual Automobile Insurance Co. announced an average rate increase of two-tenths of a percent for Arkansas drivers. The announcement came five days after the board of the Illinois-based mutual company voted a $1 billion dividend for its policyholders, which will mean about $6.7 million for Arkansas customers. State Farm cut Arkansas auto premiums an average of 4.5 percent in July 1997.

“Some people got more and some people got less,” said State Farm’s mid-South regional spokesman, Gary Stephenson. “But the overall impact of this was two-tenths of a percent. And it was the first time we’ve increased rates in Arkansas since February 1996.”

The turnaround in premiums wasn’t spurred by dropping revenue or climbing losses. The savings, say some, just bottomed out.

Only one of the companies ranked by Arkansas Business among the top for 1999 premium dollars collected less than the year before.

Increases among the state’s major auto and home insurers ranged from 2.3 percent by State Farm to a tenfold jump in premiums collected by American International Group Inc. (AIG), which grew through credit card contacts and other long-distance approaches to become the nation’s fourth largest insurer.

The combined premiums of State Farm Mutual, State Farm Fire and Casualty Co. and State Farm General Insurance Co. kept the Bloomington, Ill., auto insurance giant in first place with $373.6 million in Arkansas premiums — 2.3 percent more than in 1998.

Trailing close behind were the separate property and casualty carriers for the Arkansas Farm Bureau Federation. Southern Farm Bureau Casualty Insurance Co., of Ridgeland, Miss., collected $195.6 million in premiums and logged a 5.4 percent increase over 1998.

Farm Bureau Mutual Insurance Co., based in Little Rock, wrote another $108.1 million in premium business, for a 7.13 percent increase and a combined total of $303.7 million.

AIG jumped from 16th to third in the Arkansas Business rankings with total premiums of $166.8 million.

That edged down Shelter Mutual Insurance Co. and Shelter General Insurance Co., which took a combined fourth position with $145.3 million. The Missouri insurer launched a major initiative to expand its homeowners’ business last year by founding a savings and loan next door to its Columbia headquarters.

Joe Moseley, vice president for public affairs, said changes in the way Arkansas Business compiles its number may explain some of the increase. He said Shelter’s business in Arkansas increased about 5 percent, adding the impact of the thrift wasn’t really felt until this year.

Los Angeles-based Farmers Insurance Co., along with its partner Mid-Century Insurance, logged a 10.6 percent increase and ranked fifth, followed by Allstate Insurance, the seven companies writing insurance for St. Paul Fire & Marine, CNA Insurance Cos. and Nationwide Insurance, which reported a 16.7 percent increase over 1998 to $62.8 million.

St. Paul also gained substantial ground with last year’s purchase of U.S. Fidelity and Guaranty Co. (USF&G), which wrote $6 million in Arkansas business. St. Paul companies wrote a combined total of $80 million — or a 12.5-percent larger premium volume than during 1998.

Randy Goetz Sr., St. Paul’s resident manager for Arkansas, said the numbers don’t show business booming in Arkansas. But they do portray a downward spiral in auto rates that had to end sometime.

“We’ve been trying to hunker down a little bit,” Goetz said. “Prices kept going lower and lower until they were about as low as they could go. We finally had to say we wouldn’t lower them anymore.”

Shelter’s Moseley, however, said his customers could expect more good news in the way they pay premiums.

“We are into tiered rating, and we’re trying to offer some much better rates to at least a very large percentage of the people we sell insurance to,” he said.



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