Dale Slashes Wind Pool Rate Increase Request by Over 300
Percent: 90 Percent Rate Increase Approved
Commission says Decision Saves Coastal Residents Over $2000
in Premium Increases
From: Mississippi Insurance Commission
Filed 7/28/06 GCN
Commissioner of Insurance George Dale announced today that he will grant
the Mississippi Windstorm Underwriting Association (MWUA) a rate increase
of only 90% in the homeowner's program, an increase that is 307% less than
MWUA originally requested.
The state's actuaries recommended that if the Wind Pool were to purchase
$600 million in reinsurance they would recommend a rate increase of 192.8%
in the homeowner's program even after figuring in the $30 million in
Federal Community Development Block Grant funds expected to be paid into
the Wind Pool this year in a program developed by the MID and Governor
Haley Barbour's office.
"192% is totally unacceptable. I regret that Wind Pool policy holders will
have to pay any increase in premiums. However, an increase is necessary in
order to maintain the stability of the program. Without the Wind Pool many
residents would be unable to get any wind coverage due to a number of
companies choosing not to write the wind on the coast. This department has
worked long and hard to come up with the least painful solution to the
Wind Pool rate increase filing request. I think a 90% increase in the
homeowner's program is considerably less painful than a 397% or even a
192% premium increase. I want to stress that this rate increase is not
going to affect everyone's homeowner policies on the coast. Those who
continue to get insurance from the voluntary market will not be affected,"
Dale explained that options were sought to a solution to the Wind Pool
issue in Mississippi that would be in the best interests of all
Mississippians. Coastal residents were opposed to any increases and vocal
opposition came from policyholders throughout the state that did not want
to see homeowner's premiums in their areas rise to compensate for
additional wind pool assessments with the passage of a large rate increase
In April the Wind Pool requested a rate increase of 397% for private
dwellings. Under the 397% requested increase, the premium for a homeowner
for wind coverage on a $100,000 home would have increased from $792 per
year to $3,942 a year. By limiting the dwelling rate increase to 90%, the
premium for the same home will only increase to $1,504 a year, a premium
savings of nearly $2500 per year. Rate increases will take effect on the
purchase of a new policy or on renewal dates.
While coming to his decision Dale carefully watched and is continuing to
watch what is happening in nearby states with their wind pool situations.
Both Louisiana and Florida are struggling to keep their wind coverage
insurance of last resort programs afloat. Louisiana is facing a
significant rate increase request and litigation regarding its program.
This week a major property and casualty insurer threatened to leave
Louisiana all together. Florida had to infuse $745 million from its
state's general fund and issue $2 billion in bonds, and their program is
"We will continue to work with all interested parties in an effort to find
a solution to make insurance more affordable and available on the
Mississippi Gulf Coast. The State of Mississippi must have affordable and
viable insurance for the Gulf Coast to recover and rebuild. We can not
recover unless we all work together to solve this problem, "said Dale.
MID took a plan to use CDBG grant funds to pay for a significant portion
of the cost of reinsurance the Wind Pool was required to purchase to the
Governor's office. With their assistance $50 million over the next two
years has been approved for that purpose. Thirty million is earmarked for
this year and $20 million next. Dale stressed that MID will continue to
monitor the Wind Pool on a monthly basis and if things do not improve
rates will have to be re-examined.
"Without the infusion of these funds from Governor Barbour's Office we
would be looking at substantially higher rates. We recognize that the $50
million is not a final solution. However, the infusion of $30 million
immediately and the rate increase gives us time to work with the
Legislature to come up with a solution to the problem, because we know we
cannot go back for another $50 million next year. If the state can go
without a major storm this year it is my sincere hope that future rates
will level off or possibly even decrease,"
The MWUA reports that the Wind Pool is writing an additional 3,500
policies each month.
The MWUA only writes wind insurance in the lower six counties in
Mississippi. These are normally risks that insurance companies will not
insure due to the wind exposure. The MWUA has already paid over $700
million in claims to their policyholders. As a result of those claims MWUA
had to assess over $525 million to all other insurance companies operating
in Mississippi, even those that did not write any policies in the coastal
areas. These assessments will ultimately be passed on to these companies'
policyholders, even those policyholders that don't live on the coast.