The lack of affordability and availability of insurance has been a huge stumbling block to the Hurricane Katrina recovery on the Mississippi Gulf Coast. But new Mississippi Insurance Commissioner Mike Chaney said the soft insurance market is helping. Some new carriers have come into the market. There have been some premium decreases from existing carriers. And the Legislature appears to be ready to pass legislation that would decrease rates for the state’s Wind Storm Underwriting Association, the so-called insurer of last resort and commonly called the Wind Pool.
“We have had very good cooperation from the Legislature thus far this year,” Chaney said. “It has been very pleasing. The Legislature has realized if you are going to rebuild the Coast, you must have insurance. If you can’t get insurance, you can’t get financing. If you can’t get financing, you can’t build.”
The area of the state from Hattiesburg south accounts for approximately 40% to 50% of all general fund revenues raised in Mississippi, Chaney said. If the Coast doesn’t recover and continue to grow, then the state can suffer significant damage from a decrease in funds need to run state government.
“I believe we are already seeing that,” Chaney said. “Tax revenues are down significantly in February. They were down $28 million near the end of the month. I point out that most of the sales tax revenue comes from south of Jackson. The bottom line is we must continue economic development on the Gulf Coast, including rebuilding 25,000 to 35,000 houses on the Coast that haven’t been rebuilt due to one reason — the availability and affordability of insurance.”
There are an estimated 11,000 to 15,000 families still living in FEMA trailers. And many more are living in houses that have been temporarily repaired until FEMA maps are finalized. Chaney said the Mississippi Insurance Department (MID) has been working with Mississippi Emergency Management Agency and the Federal Emergency Management Agency to work out a solution to flood elevations. While that isn’t a responsibility of MID, Chaney said he feels it is their responsibility to keep a finger on what is going on because without adequate or current flood maps, people can’t make decisions to rebuild.
The MID is also working with all companies writing business on the Gulf Coast, especially the largest five, to make sure they don’t try to arbitrarily move out of the state.
“I’m telling them we will allow them to make a profit, but not an exorbitant profit so the cost is out of the reach of consumers on the Gulf Coast,” Chaney said. “We can’t make them stay on the Gulf Coast, but we can make life miserable for them if they refuse to write down there and they write in the rest of the State of Mississippi.
“And we have been able to have a good bit of success to attract more companies to write in the state. We announced recently Aegis is back writing in the lower six counties, specifically in the upper three and limited writing in the lower three. Republic Insurance is back in the market, although they are being selective as to where they are writing in the lower six counties. Then we have had many of the other people who stopped writing beginning to rewrite and we have filings to begin new writings.”
Another sign of progress he points to is that by pooling some multi-family dwellings using Mississippi Home Corp. tax credits, there have been some significant decreases.
Chaney said there are some projects in Long Beach right now that have insurance rates close to what they were before Hurricane Katrina. In commercial and apartment units, rates have gone down an average of 10% to 20% depending on location.
“We are recruiting and encouraging existing companies to be very competitive with multi-family dwellings,” Chaney said. “The reason for that is the surplus of rental units in Jackson County and north of I-10. To stay competitive, the owners need to be very competitive and have low rental rates.”
But “low” is compared to today’s rental rates, not pre-Katrina. Two-bedroom apartments that went for $450 to $500 prior to Katrina are now averaging $900 per month. Chaney said $500-a-month apartments aren’t likely to happen again — in some cases owners are paying nearly that for insurance alone — but any decrease would be welcome.
“Our job is to get insurance down so people don’t have such a big chunk of coming out of paycheck for insurance,” Chaney said.
One thing that could help provide relief during the current soft insurance market is a proposal in the Legislature to increase filing fees for insurance companies. Some filing fees for companies have not been changed since 1940.
“And, consequently, we have not hired the personnel to expedite their filings to increase or reduce rates,” Chaney said. “We have to review all of that, and it takes a lot of time. We are asking the Legislature to increase fees and bring it up to surrounding states’ area average, and have an expedited fee so we can fast track a petition in a matter of weeks instead of eight to 10 months. Especially if you have a rate decrease, it is a very good advantage to the consumer.”
MID has also requested permission from the Legislature to move monies to the Wind Pool to reduce rates for dwellings on the Coast an average of 11%, from 7% to 20% decrease depending on the property location. Without the action, rates would have increased 37%.
“We’re trying to enable the Wind Pool to lower rates,” Chaney said. “We are looking at a 17% decrease in commercial rates in the Wind Pool, and 36.6% decrease in the manufactured home market.”
Other bills pending before the Legislature would allow the MID to rescind the salary cap that doesn’t allow any deputy commissioner to be paid more than what the commissioner makes. Chaney said that is a sore point for him because good pay is necessary to retain the best employees, and similar caps aren’t in place for the Mississippi Development Authority or the governor’s staff.
“I want pay increases so we can keep good deputy commissioners and department directors,” Chaney said.
Contact MBJ contributing writer Becky Gillette at email@example.com.