Above you say that State Farm is a company that does not honor contracts and then criticize them for leaving leaving Mississippi. If you think State Farm is such a bad company, then wouldn't you think it is a good thing when they write less business? Call me crazy, but when I believe a company is trying to cheat me I do my business elsewhere.

Drew,

These are obviously two different issues.

1) Standing behind your product.

2) Leaving the state hanging on coverage for homeowners' insurance.

There is obviously not perfect elasticity in the insurance market in the sense that it's not necessarily easy for a new provider to just hop in as if they were selling pretzels in a new part of Central Park.

Saying "why can't the insurance companies stand behind their products after they've already been paid for in premiums for years" and saying "State Farm's sudden departure to attempt to blackmail the state" are two different points.

As you know last year the homeowners' insurance industry brought in record profits, it's not as if State Farm is actually struggling financially in the area.

1) If State Farm is selling--as you allege--a dishonest and possibly fraudulent product, what value is there in standing behind it? If the Mississippi AG actually believed that State Farm rips off his constituents, he would be glad that he left them "hanging."

2) Homeowner's insurance, when not regulated, is a fiercely competitive business with very elastic supply. You may be getting this confused with demand for homeowner's insurance. That is close to inelastic. There are a variety of financial products that would allow for a firm to expand to take the quarter or whatever of new insurance premiums that State Farm would have taken (quota share reinsurance, for example). So why are no firms chomping at the bit to take up State Farm's market share? Because Mississippi does not let them charge market rates for insurance and decides, after a hurricane, what insurance contracts cover. Homeowner's insurance OUTSIDE OF Mississippi (and a few others) brought in record profits, but in Mississippi it is hugely unprofitable. The only way to write business there is to take money from their policyholders in other regions. No responsible corporation would do such a thing--least of all a mutual insurance company like State Farm that answers to policyholders instead of shareholders. This could be a new definition of chutzpah: Mississippi killed their insurance market and then complained when no one wanted to write insurance there.

3) If homeowners' insurance in Mississippi is as profitable as you seem to imply, then it's an odd form of blackmail for State Farm to threaten to stop writing it. I believe you are confusing national profits with statewide profits.

4) "why can't the insurance companies stand behind their products after they've already been paid for in premiums for years" Reread the press release. The State Farm decision only covers new policyholders.

Let me modify the question: You say that 1) State Farm is a greedy company that cheats Mississippians. 2) Mississippians are better off with State Farm staying because no one else will provide them with similarly cheap insurance. How do you reconcile those two?

On a side note: It doesn't matter for the discussion, but I believe the supply of food stands in Central Park is more inelastic than you say. They require permits that are limited in number and quite valued.

Cool site. Thanks:-)