In the year 2006, George Dale, the state’s insurance commissioner, will continue to strike a delicate balance of working with insurance companies and Hurricane Katrina victims, especially those whose insurance has not covered damages.
“The insurance companies say they feel pressured to pay claims they don’t owe,” said Dale. “On the other side, we’re getting from the public they feel I’m in bed with the insurance companies. So I am most definitely caught in the middle.”
On September 7, nine days after Hurricane Katrina swept through the Pine Belt and coastal regions of the state, the Mississippi Insurance Department (MID) issued a bulletin directing insurance companies to not deny a claim without inspecting and adjusting the claim onsite, not submit any claim without some wind damage, and to err on the side of the policyholder if the adjuster could not determine whether damage was wind- or water-related.
Within the next few weeks, MID will implement a mediation program for Mississippians with losses not covered by insurance providers “to have another layer that will offer some possibility of settling claims,” explained Dale.
Even though many folks are still lobbying insurance companies to get their Hurricane Katrina-related claims paid, more than $5 billion had been paid out collectively on water- and wind-related insurance claims in Mississippi, as of November 21. Some reports have placed total claims at more than $30 billion nationwide.
As a result of the huge payouts, speculation has swirled that several major insurance companies plan to leave Mississippi before another natural disaster occurs.
“I recently had a very positive breakfast meeting with 11 major insurance company executives from all over the country, some of which write a lot of business — commercial and homeowners insurance — in Mississippi,” reported Dale. “Most of them indicated they plan to continue writing in our state, but they may have to put a bigger portion of the wind coverage into the wind pool than they’d otherwise like to do.”
It’s too early to tell whether Allstate will pull out of high-risk areas, said Dale.
“They haven’t indicated to me,” he said. “I’ve talked to some of their officials and, like all companies, they’ll have to reevaluate their exposure and readdress their premium costs. But I don’t see a wholesale withdrawal by them or any company.”
The new elevation maps will prompt changes in coverage, with “companies being very selective about insuring those people who rebuild with new and better building codes as opposed to folks who do not,” said Dale. “We’re looking at trying to get the industry to consider some type of discount in premiums for those people who rebuild based on better building codes.”
Last month, Dale attended a National Association of Insurance Commissioners meeting in Chicago, which focused on Hurricane Katrina-related claims. Florida insurance commissioner Kevin McCarty, chairman of the catastrophic insurance working group, explored issues dealing with the future of insurance in disaster-prone areas. Dale is currently working on a white paper that addresses whether the insurance industry can survive large-scale national disasters.
“Instead of redefining the policy concerning flooding and storm surges, for example, insurance companies are going to have to have an all-perils policy, where all perils — earthquakes, hurricanes, tornados — are lumped under one policy,” said Dale, the longest-serving state insurance commissioner in the U.S. “The insurance industry works under the law of large numbers. The guy in Montana who lives on the top of a mountain doesn’t want to buy flood insurance. The guy in New York doesn’t want to buy earthquake insurance. So to make an all-perils policy available and affordable to people who live in disaster-prone areas, everybody has to purchase all of it.
“Right now, the folks in Oklahoma are saying they shouldn’t have to pay higher insurance rates for a guy who wants to live in Biloxi, but the truth of the matter is, they are paying because they pay taxes to keep the federal flood insurance program afloat. One speaker at our meeting estimated that, with interest over time, flood insurance costs the average taxpayer $2,000. So the guy in Oklahoma is already helping pay for losses on the Coast.”
Medical Assurance Company of Mississippi (MACM) has increased the company’s medical malpractice writings in Mississippi, reduced premiums 5% and anticipates a further rate reduction in 2006 if losses continue at the going rate.
“At this point, we don’t have more medical malpractice insurance companies coming back into the state,” said Dale.
Last year, state lawmakers changed the law on mandated minimum limits for automobile insurance, so Mississippians can expect to pay more for the bumped up coverage, said Dale.
This year, the MID built a comprehensive Web site with information updated on a daily basis for the general public and insurance companies. Agents can now get licensed online, and companies can also now file online. “Speeding up that process should make it easier for everyone in 2006,” said Dale.
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.