The Farmers Conspiracy

Embattled Firm Won't Win Any Oscars, but Farmers Insurance Showed it Can Play Harball with the Best

By MIKE HAILEY

The wildest conspiracy theory on Congress Avenue in quite a while spun off the state's legal battle against Farmers Insurance last year over the high cost of homeowners' insurance in the state.

It seemed like a classic game of political hardball on the surface. Governor Rick Perry and then-Attorney General John Cornyn hauled Farmers into court on charges that the company's prices for homeowners' coverage were illegal. Farmers responded with a curve ball, announcing it was pulling out of the homeowners' insurance market in Texas. A few weeks later, Farmers notified me and about 699,999 other Texas homeowners that our policies were being cancelled.

Personally, I was kind of disappointed to see Farmers go. Call me weird - but I like Farmers Insurance. In fact, it's my favorite company. Sure, I've heard all the accusations about how houses would get eaten up with mold because companies like Farmers had refused to fix a leaky faucet or committed some other glaring omission that led to catastrophic results. But I had not encountered any problems like that in my own experience as a Farmers customer. Quite the contrary. The agents were always courteous and helpful. When lightening blew out my air conditioner and television set, Farmers took care of the problem right away. I'm also a fan of Farmers because they hire people like Mark Toohey to move from Austin to LA to oversee political strategy - and he's one of the nicest guys around. So all that made it harder to take sides in the colossal standoff between my insurance company and the state.

Then I heard the theory. Under its scenario, what looked like a battle was really a clever drama produced, directed and acted out by allies instead of enemies. The State of Texas and Farmers were really on the same side. According to the wide-eyed imagination of the theorist, Farmers had served itself up as a whipping post for Perry. The Governor's close ties to the insurance industry were coming back to haunt him in his re-election race. He could use an insurance company to beat up on - and Farmers volunteered to be the target for some of Perry's rhetorical campaign wrath.

That's crazy, I thought. Nobody would be willing to take such a brutal PR beating. Besides, Farmers wouldn't be leaving the state if the company and the Perry campaign had only exchanged winks with plans to kiss and make up right after the election. I had seen the cancellation notice. It was official. Farmers was on the way out.

The theorist refused to believe it. Farmers was only bluffing. The company wouldn't quit selling homeowners' policies in Texas and had never planned to do such a thing. The plot grew so thick that actors were being hired to play angry Farmers agents who showed up at Perry campaign stops to protest how tough he was on big insurance. If Farmers and the Governor's office weren't reading from the same script, there was no way Austin consultant Bill Miller, a contributor to both Perry and Cornyn, would be questioning their motives while defending Farmers in the press.

That was the theory anyway. The rest is history. Perry won the election easily. The state and Farmers negotiated an agreement that consumer critics blasted. And I didn't lose my home insurance because Farmers decided to stick around. That part of the theory came true.

Now the spotlight shifts to a Legislature and its many members who mixed tough talk with promises about cracking down on insurance when they were candidates last year. But when the spread is set and the betting's under way on a game of hardball between Texas legislators and the second largest home insurer in the state, I'll take Farmers and you can have the points.

Mike Hailey's column appears weekly in the Viewpoints section