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State Fire Rebate Insurance disbursement hits all-time high

In the aftermath of Hurricane Katrina, the Mississippi insurance industry and the clients it serves needed some good news. And, they got it in June when the Mississippi Department of Insurance (DOI) announced that there would be a record disbursement of State Fire Rebate Insurance funds to the state’s cities and counties totaling approximately $14.41 million. Total annual disbursement over the program’s history had been $11-$12 million, according to the DOI’s Fire Services Division.

“This is the largest disbursement since 1988 (when the current program began),” said George Dale, who has served as state commissioner of insurance and state fire marshal almost as long as the state has been providing rebates. “The addition of new departments through this program has made our state safer in regard to loss of lives and property to the perils of fire. Insurance rates for fire loss have dropped dramatically to where all Mississippians can afford to purchase it.”

The state has actually been providing insurance premium tax rebates to municipalities and counties for 32 years. Originally, the rebates only went to cities, which did not please county boards of supervisors. After supervisors grumbled for years over being left out of the rebate program, it was radically changed in the late 1980s in order to offer counties an equal share of the pie, according to Dale.

In 1988, the Mississippi Legislature passed House Bill 693, which launched a major initiative to provide low-cost, quality fire protection on a statewide basis. Funding to cities and counties was equalized, with the condition that counties take the lead in developing rural fire protection.

Since 1988, more than $190 million has been disbursed under this program, according to the DOI, which was given overall implementation and administration of the program. The cities and counties are in turn required to reinvest those funds to improve fire protection and firefighting capabilities. And, there are other provisions, such as requiring that municipalities and counties hire an arson specialist.

However, the positive financial results of these rebates to Mississippi’s cities and counties are readily apparent. When the DOI took over the program’s oversight, there were only 350 fire departments statewide employing less than 5,000 firefighters. Today, that number has grown to more than 750 main fire stations supporting more than 1,200 substations that are manned by more than 15,000 firefighters.

Approximately 13,000 of these firefighters are volunteers, and in 2005 alone, these fire departments responded to more than 140,000 calls for help. While the State Fire Rebate Insurance program cannot claim credit for all of this increased fire protection and firefighting capabilities, Dale said the program’s benefits have played a significant role.

Dale pointed out that these numbers offer more than peace of mind to residents as well as businesses in these counties and municipalities in terms of fire insurance cost. Working with local fire officials, the Mississippi State Rating Bureau assigns a ranking to these areas. A score of one to 10 is assigned, with 10 being the worst and one the best. (According to Dale, the City of Jackson has the best rating of a three with all others falling in the three to four range or worse.)

“With each point improvement in the rating system, businesses will see a 15% reduction in their fire insurance premiums,” Dale said. “If an area goes from a rating of 10 to a rating of nine, fire insurance premiums are lowered by 15%. If an area goes from a 10 to an eight, then the savings is 30%. It is very significant.”

This year’s disbursements varied significantly from county to county. For instance, Rankin County received the largest disbursement at approximately $317,471, while Issaquena County received approximately $7,580. And the hard-pressed coastal counties of Harrison, Hancock and Jackson, which were devastated by Hurricane Katrina, will each receive six-digit reimbursements.

Contact MBJ staff writer Wally Northway at northway@msbusiness.com.


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