From Tupelo to Gulfport, there’s concern about rising property insurance rates resulting from the catastrophic Hurricane Katrina losses. Insurance agents acknowledge that all areas of the state will bear some of the burden of maintaining a viable industry. They also say it’s a matter of educating clients to help them understand that it’s not just a Gulf Coast issue.
Debbie Shempert of the Renasant Insurance Agency in Tupelo is president of the Independent Insurance Agents Association of Mississippi. She says the group talked about the issue at their June convention and at executive committee meetings.
“It’s one of the main topics each time and will continue to be,” she said. “Our goal is to work with retaining and recruiting insurance companies in the wake of Katrina. Before the hurricane, we already had a task force to call on companies to let them know about tort reform in the state. Now we’ve added Katrina to those discussions.”
Shempert, who’s only the second female president in the association’s 109-year history, stresses that insurance worries are not just a Coast issue but is a problem that affects the whole state.
“We’ve seen a lot of companies tighten up, and we’re telling the Legislature and our national legislative representation to stabilize the industry for the entire state,” she said. “We really can’t predict what will happen. Companies are looking at the attorney general’s lawsuit and other things. Everyone is waiting to see what happens.”
Although she hasn’t heard angry comments from clients about rising rates, she has had some inquiries. “I talk to them one at a time and tell them rates will go up all over the state,” she said. “If rates aren’t raised, everyone is hurt. We have to get the word out.”
Jimmy Galloway of Columbus has been in the insurance business for 30 years. “I’m hearing concerns from some clients, especially those who keep up with financial news and are informed,” he says. “They know it’s a true dilemma and that what affects the Coast affects the entire state. A lot of people don’t realize that.”
Galloway, president of Galloway-McKinney Inc., says a better informed public will help residents north of the Coast better understand that the insurance industry must remain viable for the whole state. “If we see insurance companies leave the state, that will have a definite effect on everyone and we’re sunk,” he said. “There are solutions but none are palatable.”
Solving the problem will take coordination on a lot of fronts, including the industry, governor, state insurance commissioner and the Legislature. “It’s a tough thing and I would hate to be in Commissioner Dale’s shoes,” Galloway said. “You can’t please everybody.”
Galloway and Charles Gordon of Hernando note that northern counties must address the fear of earthquakes and that a number of people in the northernmost areas carry that disaster coverage.
Gordon, president of the Cook Insurance Center, is already seeing fallout from Katrina with Allstate Insurance Company not continuing earthquake coverage for renewals in the counties just south of Memphis that are close to the fault line.
“The companies are changing their stance on disaster coverage and that will have a tremendous effect on DeSoto, Marshall and Tunica counties,” he said. “I’m afraid should State Farm pull out, property values will change here.”
Technically his area is part of Mississippi, but Gordon says that with no state newspapers or television coverage available there, people don’t know much about Katrina.
“People here are not aware of the insurance hearings and the changes that may happen,” he said. “It hasn’t reached them yet. I’ve talked to one person concerned about it and he said ‘those people chose to live on the Coast’.”
Danny Moseley of Insurance Associates in Magee worked a lot of wind claims from Hattiesburg north. So far he hasn’t heard a lot of complaints but thinks everyone is expecting increases.
“I think they anticipate it and realize the key to rebuilding is having the availability of insurance,” he said. “We’re holding our breath and hope this season passes without a major storm.”
Moseley saw a crucial insurance issue for four or five months with the poultry industry, a key player in the Magee area. “The poultry industry had an availability crunch for several months and that’s not a good thing,” he said. “A band aid was applied and the industry is looking at long-term solutions.”
SouthGroup’s Ronnie Tubertini says his agency is experiencing a tighter market across the state in all their brands.
“Many companies that write property insurance are waiting to see what the outcome of the wind pool rate increase will be,” he said. “Everyone is affected by that because every company has the involuntary obligation to participate in that if they write property insurance. Until Katrina, it was not a big concern and we’ve never had anything like this.”
Tubertini says that by definition insurance is a spread of risks and is a matter that the state must address. “If we have companies willing to write coverage on the Coast, we’ve got to have a spread of risks throughout the state,” he said. “There’s too much exposure without that spread.”
He says he hears from people north of Interstate 20 that they shouldn’t be paying for people on the Coast but information helps them understand what’s at stake. “When it’s explained, they realize that the Gulf Coast is a vital part of Mississippi’s economy; that the Coast can’t rebuild without insurance; and that it’s more than an insurance issue,” he said. “The insurance commissioner has tried to explain, but it’s not an easy concept to understand.”
Like the other agents, Tubertini hopes insurance companies continue to write coverage in the small Mississippi market. “My concern is maintaining enough companies to keep the market competitive,” he said. “When you hear someone say ‘just let the insurance companies leave,’ that’s anger and emotion talking. The more companies we have writing in the state, the better rates will be for everyone.”
Shempert is optimistic. “The more we can talk to people, especially when you get away from the Coast, it will help,” she said. “I still believe human nature is good and people will do the right thing if they have all the facts.”
Contact MBJ contributing Lynn Lofton at email@example.com.