GULFPORT (AP) Mississippi’s largest homeowner insurer said it has had enough of the “untenable” legal and political climate and is suspending writing new homeowners and commercial policies in a state still struggling to recover from Hurricane Katrina.A spokesman for State Farm Insurance Cos. said the decision was due in part to the wave of litigation the company has encountered since the August 29, 2005, storm. Mississippi is the latest state along the hurricane-vulnerable Gulf Coast to at least temporarily lose an insurer.

In Florida, several insurers have dropped tens of thousands of policies since the back-to-back storm seasons of 2004 and 2005, when eight hurricanes hit the state.

And in Louisiana, many insurers have stopped writing new policies along that state’s coastline, said Amy Whittington, spokeswoman for the Louisiana Department of Insurance. However, Whittington said no company has made a blanket decision eliminating all new business in that state, which — like Mississippi — stretches hundreds of miles northward from the Gulf of Mexico.

State Farm has more than 30 percent of the homeowners policies and 8.5 percent of the commercial policies in Mississippi. The company said the suspension would begin today and continue until the business climate in the state is more palatable.

As far as its current homeowner and commercial policies in the state, the company said in a statement that it continues to assess its position in the Mississippi marketplace “to determine what further steps, if any, are necessary.”

The suspension does not impact State Farm’s financial services, banking products or automobile coverage in the state.

Mike Fernandez, vice-president of public affairs for State Farm, said Mississippi’s “current legal and political environment is simply untenable. We’re just not in a position to accept any additional risk in this homeowners’ market”.

The suspension was not a direct response to any specific development in the litigation, Fernandez said. That litigation has included a recent federal jury’s $2.5 million punitive damage award to a couple who sued State Farm for refusing to cover the Katrina’s storm surge damage to their Biloxi home.

US District Judge L.T. Senter Jr. later reduced the award to $1 million, though he said State Farm acted in a “grossly negligent way” by denying the claim filed by policyholders Norman and Genevieve Broussard.

J. Robert Hunter, a former Texas Insurance Commissioner and now director of insurance for the Consumer Federation of America, said many other major insurers may be reluctant to step in and fill the void left by State Farm in Mississippi.

“A lot of the larger companies already are reluctant to write new business there,” Hunter said. He said the action “will obviously make rates higher for people trying to get new policies. People with existing policies are probably going to pay more too just because of supply and demand”.

Robert Hartwig, vice-president and chief economist for the Insurance Information Institute in New York, an industry-funded group, said the courts and some Mississippi officials have created a “virtually impossible working environment for insurers”.

“I view this decision as the inevitable outcome of the increased uncertainty and cost associated with the litigation that has developed post-Katrina,” Hartwig said of State Farm’s decision.

Mississippi Attorney General Jim Hood sharply criticised the decision, saying State Farm had indicated in the past it would remain in Mississippi and continue to write homeowner policies. Hood said it was State Farm and not Mississippi that had created the problem by refusing to pay claims and dragging out the process.

“If they paid what they owed in the first place, there never would have been a lawsuit filed,” Hood said.

He said the insurer was trying to “nickel and dime” policyholders on the coast after making “$3.9 billion in the most catastrophic year in history”.

Mississippi Insurance Commissioner George Dale said the company’s suspension of writing new policies comes at a time in the recovery process when “it is becoming more vital than ever that policyholders in Mississippi have a viable and affordable insurance market”.