Insurers in Mississippi have an Oct. 1 deadline to provide the state Insurance Department with data mandated by the new Property Insurance Clarity Act.
Mississippi follows neighboring Alabama and Louisiana in requiring major insurance companies to supply details on premiums and losses by county and zip code. Insurance Commissioner Mike Chaney had already issued his own data call back in 2014 for much of the same data that is now being asked for under Mississippi’s new law.
State regulators will analyze the data to determine if the rates homeowners pay accurately reflect their insurer’s risks and losses.
Backers of the grassroots Clarity movement believe the data will show that policyholders in coastal locations are paying higher rates.
Jackson attorney Lee Harrell doesn’t expect any surprises from the analysis. A former Insurance Department official, Harrell is a partner at Baker Donelson and chairman of the Jackson firm’s insurance regulatory group.
“People on both sides of the fence have differences of opinion on what the data says and about the premiums being charged,” he said. “Based on my experience it’s going to reflect the rates are high. No one downplays the cost of insurance. It is expensive everywhere.”
Much of the information being required is already available in rate increase filings and the insurance department reviews it before any new rates are allowed to be charged, Harrell said.
“I think the data is going show rate filings going back to 1994 will be supported by the numbers, but we’ll see,” he said.
It will be up to Chaney, his staff and his outside experts working together to analyze the data and see what it means. “I don’t think it’s going to reveal companies shifting premiums from one end of the state to the next,” Harrell said.
He said rates were expensive on the Mississippi Gulf Coast before Katrina and have continued to escalate, as have rates from Texas to Florida and up the East Coast, especially following Hurricane Sandy. “Everybody thinks they’re paying too much,” Harrell said. “It’s not just a Mississippi Gulf Coast problem.”
Further, Harrell said, a look at rate filings and losses in the state shows that property insurers “are not making a lot of money. Most are losing money in Mississippi or are just breaking even,” even in years without hurricanes Mississippi still has to deal with tornadoes, straight line winds and ice storms.
There has been some rate and market stabilization in Mississippi, Louisiana and Alabama but insurers still are not seeing “much profits” even with no recent hurricanes, he said. “We have seen some companies enter the markets, but you don’t see a lot of companies wanting to enter any coastal markets in Mississippi or other states,” Harrell said. “There is concern of the impact of a major hurricane. The companies still remember that when Katrina made landfall many companies lost more in claims in one day then they had collected in premiums in the history of their operations in Mississippi.”
He added, “There is a difference between being high and affordable and being justified. I suspect everyone thinks their rates are high but it doesn’t mean they aren’t justified.”
Harrell said the Clarity Act movement started in Alabama, where proponents believed their high premiums were subsidizing the rest of the state and worked to get the law passed. A similar push in Louisiana in 2014 resulted in a Clarity law being enacted there. Mississippi backers of the movement tried to follow along in 2014 but weren’t successful until this year. “We are starting to see similar movements in other coastal states as well,” he said.
In Mississippi the act covers the larger property and casualty companies and the Mississippi Windstorm Underwriting Association.
The wind pool is in the top five insurers in the state even though it serves only six of Mississippi’s 82 counties. “It was agreed the wind pool would be included in the data call because of its size. It’s the only way to get an accurate portrayal of the Mississippi markets.”
Among the data required are policy limits, reinsurance and allocated loss adjustment expense covering homeowner policies including condominiums, dwelling fire policies, renters insurance and mobile home insurance.
Harrell said breaking down the required data by county and zip code presents some challenges “because not every company tracks data the same way.” The process is doable, he said, and companies are complying.
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