to Supplement Wind Pool Insurance Program to Help Reduce Rate Increase
By Keith Burton - GCN Filed
Standing along side State Insurance Commissioner George Dale, Governor
Haley Barbour announced today he has set aside $50 million in
state-administered federal grants to help mitigate an expected increase in
the cost of insurance to consumers under "wind pool" policies. The
governor made his announcement at a press conference at the Coast Coliseum
Convention Center in Biloxi, where FEMA's Coast headquarters is located.
The wind pool - officially known as the Mississippi Windstorm Underwriting
Association - is an insurer of last resort for homes and businesses in
Harrison, Hancock, Jackson, Stone, George and Pearl River counties. It is
funded through customer premiums and assessments from every insurance
company in Mississippi.
"We are taking action to try to help Mississippi recover from Katrina,"
said Governor Barbour. "This $50 million dollars will help people recover
from Katrina, but it will not affect insurance rates later," Barbour said.
As a result of Hurricane Katrina, 16,000 policy holders in the wind pool,
almost all of whom have already incurred devastating personal losses, face
the prospects of huge increases in their annual premiums for wind and hail
insurance. Insurance companies have requested premium increases that are
nearly 390 percent higher than before Katrina, an amount that would keep
many homeowners from being able to rebuild or afford insurance and would
be economically debilitating for the Coast.
Neither the Governor, nor Dale would comment on how much the $50
million will help reduce the amount of the
rate increase, but both said it would substantially reduce the 390 percent
increase requested by insurance companies to help offset their losses from
Katrina. Dale said it would be two or three weeks before they will be able
to know exactly how the money will affect the requested increase. He said
an announcement will be made then.
"But it will be considerably less than 390 percent," said Dale.
In a written press release, Governor Barbour said, "Mitigation of these
costs is integral to the recovery of the Mississippi Coast. If insurance
becomes unaffordable, financing and rebuilding efforts become much more
The Governor said he intends to use $30 million this year and $20
million next year in Community Development Block Grants to offset these
costs, making policies more affordable for consumers who need the
protection. The money for the state help is from the $5 billion the state
received to help the Coast recover. The federal Department of
Housing and Urban Development has given the state approval to proceed on
the state's plan to spend the money pending the outcome of a public
Many industry observers believe that absent another huge storm,
reinsurance costs will substantially decrease for the 2007 hurricane
season. With a grant to cover the surge in reinsurance cost, the wind pool
can reduce the amount of premium increase needed for 2006.
Dale says that keeping insurance affordable and available is a priority
to the recovery of the coast and will continue to be a priority for the
Mississippi Insurance Department. An important part of that process is
making sure the wind pool remains solvent so that people living on the
coast have access to the windstorm coverage
they so badly
need during hurricane season.
As part of an approval process through the U.S. Department of Housing and
Urban Development, the Governor's plan for wind pool mitigation and a
ratepayer mitigation plan to defray potential additional consumer costs
resulting from utility infrastructure restoration in the wake of Hurricane
Katrina are open for public comment.
The ratepayer mitigation plan is designed to help South Mississippi
customers of utilities that incurred additional costs to provide emergency
and temporary services after Katrina.
Dale said the state's wind pool insurance program needs to be updated.
He said that when it was created, lawmakers and insurance industry
officials never anticipated the size of losses as were seen from Katrina.
State lawmakers are studying what changes are needed for the future.
The Ratepayer and Wind Pool Mitigation plans are posted on the Mississippi
Development Authority Web site,
www.mississippi.org. The draft plan is also available at county
courthouses, administrative offices, city halls, and on the Internet at:
www.mshomehelp.gov. Comments can
be faxed to 601.359.9280 or submitted through a comment form on the
aforementioned Web site. All comments must be received by June 24, 2006 to