It has more than four letters, but to many people on the Gulf Coast “insurance” is a dirty word. Sky-rocketing insurance costs are hampering residential and commercial rebuilding. State and federal governments are trying to provide relief to help the beleaguered area recover from Hurricane Katrina’s destruction.
U.S. Congressman Gene Taylor is pushing an insurance bill that will add wind coverage to the existing national flood program. The bill started out as an all-perils insurance measure, but Taylor spokesman Brian Martin says passage of that bill would have taken a lot longer to pass and bring help to Gulf Coast residents.
Before the August recess, the bill cleared a key committee, the house financial services committee, and is expected to be on the front burner when legislators return to Washington. Taylor’s office also sponsored a briefing to share information about insurance issues in Mississippi, and Martin says there was an overflow crowd.
Taylor’s letter inviting fellow members of Congress to the briefing states, “The House may consider legislation to address this crisis by creating an option in the National Flood Insurance Program to offer wind and flood coverage in one policy, at risk-based, actuarially-sound premiums.”
Martin thinks the House vote may come in December, and says in the meantime Taylor will keep building support for the bill. U.S. Sen. Trent Lott wrote a letter of support to the House and U.S. Sen. Thad Cochran’s staff is keeping up to date on the measure’s progress.
Taylor recently brought House leaders — including Speaker Nancy Pelosi — to Mississippi to see progress and lack of progress in the rebuilding effort. Bay St. Louis independent insurance agent David Treutel spoke at the Washington briefing and met with House leaders during their Coast visit.
“These national leaders are very optimistic the bill will pass the House,” he says. “I think it’s a fantastic bill.”
Treutel was also appointed by Gov. Haley Barbour as a member of the state Wind Pool insurance board, which is forging ahead to bring about improvements. Recently announced measures include credit for higher deductibles.
“One solution long term is that we must build back stronger and safer,” he says. “We now have the International Building Code and individuals can get additional credit if they meet these standards.”
For those in the state Wind Pool, there have been two rate classes for homes, frame and masonry. Now there are two new ones, semi-wind resistant and wind resistant, which will cause homeowners’ rates to drop.
The insurance industry’s requested residential rate increase of 397% was offset by Community Development Block Grant funds. The 268% commercial rate increase was reduced by 35%. Treutel says it’s still not cheap, but it’s much better.
“Competition will bring the rates down,” he says. “We won’t ever see again what we had, but we can build back stronger. That costs more but we will recoup it over the long haul.”
Treutel, who lost his home and office to Katrina, struggled to honor clients’ claims and do the right thing. He applauds the Legislature for their assistance in solving the Coast’s insurance crisis and says his eyes were opened to the need for a better way to respond to disaster.
“I am proud of the way our state and leaders responded. Government can make a difference,” he says. “We don’t want insurance companies leaving the state because they will leave the whole state. We have some incentives now to encourage companies to write in the state. Mississippi has only 6% of the insurance business in the country so we can’t force them to write policies here. We can offer incentives with actuarially sound numbers. No state has done better than our governor and Legislature.”
New insurance commissioner
With the defeat of Insurance Commissioner George Dale in the Democratic primary, the state will have a new insurance commissioner. Both candidates, Democrat Gary Anderson and Republican Mike Chaney, are looking ahead to solving the Coast’s insurance problems.
“The insurance market on the Gulf Coast is dysfunctional now,” Anderson says. “I look forward to aggressively marketing the state and the Coast to make our state an attractive place for insurance companies to come. I want to make it more competitive and more consumer friendly.”
He says the state has the third-highest insurance rates in the nation, according to the National Association of State Insurance Commissioners. “That’s not because of Katrina,” he says. “We want Mississippi to get a good deal,” he said. “I applaud Congressman Taylor; it’s a good piece of legislation. In addition, we will do other things. I think it will help for companies to understand our state. I want a business relationship with these companies; not a cozy one.”
Anderson, who served as executive director of the Office of Finance and Administration under former Gov. Ronnie Musgrove, finds concern about costly insurance all over the state. “My whole campaign is based on getting these costs down,” he says. “Consumers have had little input, but I will keep a record of their complaints.”
Republican nominee Mike Chaney also says Congressman Taylor’s bill is a step in the right direction. “I’m a proponent of a federally-designed safety net for the Wind Pool like the flood program,” he says. “It should be priced just above the private market where it doesn’t compete with the private market but is still affordable for people living on the Coast.”
He also feels the state should have uniform adjustors for multiple insurance policies, and that insurance companies need to be prepared to pay living expenses for clients even if it’s a minimum amount.
“I want policies to be written in simple, unambiguous language that people can understand,” Chaney said. “Anything not covered should be printed in bold type and should be signed. We must make it very clear.”
Chaney, a former state representative and senator, worked to develop building codes for the Coast and wants to organize a gulf states coalition so insurance companies can’t cherry pick where they provide coverage.
“Government’s job is to see to it that affordable insurance is available for all people,” he affirms. “We all lose when insurance companies pull out of our state.”
Goals and objectives
Brian Martin says Congressman Taylor’s bill hopes to accomplish several things:
• Consumers can buy flood and wind insurance and know they’re covered.
• Insurance coverage can be obtained in one place.
• It will stabilize the market and bring companies back into the market.
• Premiums will be based on risk and set so the program pays for itself.
• Coverage will only be available if local communities have building codes and flood plain management.
• Private insurance agents will sell the policies.
“The cost of re-insurance is going up. It’s less regulated and kind of a mysterious deal,” he says. “Re-insurance can’t put together a big enough pool to spread the risks. The way to do it is through the federal government, which already has a flood program. This bill will do it in a responsible way. The federal government doesn’t have to get re-insurance from Lloyd’s of London.”
Contact MBJ contributing writer Lynn Lofton at email@example.com.