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Gulf Coast seeing positive movement regarding hurricane insurance rates

MARK CUMBEST

ANGELYN TREUTEI ZERINGUE

By BECKY GILLETTE

For many years after Hurricane Katrina, the high cost of insurance was a drag on the Mississippi Gulf Coast home sales market. The summer of 2017 was tough for hurricanes, even though only one hit Mississippi. Category one Hurricane Nate caused some water damage, but no lives were lost.

But despite this past year’s active hurricane season, there are reports that the cost of hurricane insurance has decreased and more people are able to purchase private insurance rather than from the Mississippi Wind Storm Underwriting Association (known informally as the wind pool).

“What has happened, which is a healthy indicator, is the wind pool–which is insurer of the last resort—is being depopulated,” said Mark Cumbest, broker-owner and founder, Cumbest Realty who has been on the Mississippi Wind Storm Underwriting Association Board of Directors since 2007. “What that means is that people are getting out of the wind pool and going to private insurers. They are finding better prices in the commercial insurance market.”

In 2011, there were 46,000 wind pool policies in the six coastal counties.

“And now we have 23,100 policies,” he said. “That’s good. It is decreasing at a quick rate. In December of 2016 we had 31,000 in the wind pool, In December 2017 we had 25,000 in the wind pool. And now we are down to 23,100 policies. People are buying in the commercial market, which is the way it should be. It is market driven because people are going from higher premiums in the wind pool to the lower premiums they are finding in the regular insurance market, which is a good indicator.”

Real estate is all about affordability. People look at principal and insurance payments, property payments, and utility bills. Cumbest said that when one of the main components—insurance–decreases, that is a good thing for affordability in housing.

“After the storm there were not that many commercial insurance companies writing policies,” Cumbest said. “But the commercial writers came back a whole [lot] quicker and now only two in the wind pool are commercial properties. Our goal under the wind pool was to depopulate. For many years after Katrina we were the first resort for insurance and we are always supposed to be the last resort. But now after 13 years we are getting closer to normal on the insurance market. I’m hoping people will continue to cancel wind pool policies and go out into the market because they can get a better deal in the regular commercial real estate insurance market.”

Cumbest said home sales on the Mississippi Gulf Coast have picked up. That has been helped by interest rates remaining fairly low.

“A lot of prognosticators said rates would be a lot higher now and they are not,” Cumbest said. “That is good for the home buyer. We are seeing more and more new construction right now. The economy nationally and locally seems to be improving. That makes it easier to remove the cloud of doubt as to whether invest in a home or wait and continue to rent. Whenever that cloud dissipates, it is good for the overall economy. Builders are getting to be busy again.”

Cumbest has a couple of development in the process of being approved and says he is getting a lot of calls for homes and land.

“It is a good thing and I think it will just get better,” said Cumbest, who is the current chairman of Mississippi Real Estate Commission.  “In my 44 years in this business, I have seen a lot of ups and downs, a lot of fluctuations. Right now, I see a prolonged growth period that I don’t anticipate ending anytime soon. I think we are in an upward swing.”

Angelyn Treutel-Zeringue, president, SouthGroup Insurance—Gulf Coast, agreed that the coastal insurance market is very favorable right for home owners and businesses.

“The wind coverage can be included with fire coverage in most cases and that gives you additional savings,” Treutel-Zeringue said. “It will depend on the structure and the location. An agent can shop it around for you to get the best coverage offerings based on your individual situation. There was a lot of upward pressure on the wind rates. Now that has come and we are seeing upper pressure on flood rates. We really need in the U.S. some good flood reform. There is some good energy around it but so far we haven’t been able to get Congress to pass it.”

She said one good thing going on now is private flood insurance markets. This is providing better options for coastal residents. After Hurricane Katrina there were a lot of disputes about whether wind or flood caused the damage.

Treutel-Zeringue said in the hurricane prone area, the distinction about what causes the damage, wind or water, requires so much legal interaction to make that determination that it is more cost effective to include flood coverage in with wind policy.

“We are seeing several markets offering an all perils policy, which is really exciting,” she said. “We now have offerings where can get fire, wind, liability, flood and even earthquake coverage all in one policy. You reduce the number of adjusters and the amount of your deductible because you just have one deductible. It is a super win-win situation for consumers.”

Treutel-Zeringue said insurance rates are static to decreasing. If one company goes up on rates, usually consumers can move to another company with better rates.

One problem she sometimes sees with real estate sales is the lack of flood insurance.

The best advice I can give to anyone is to make sure they have a flood insurance policy and they don’t let it lapse,” she said. “Homes are much easier to sell with an existing flood policy. For businesses it is pretty much the same. The reason it is really good to have a policy is that the Coast flood zones were remapped after Katrina. There are certain structures that are grandfathered. If you don’t keep insurance, you can lose it and then have pay much more to get flood insurance again. And of course, commercial insurance is more expensive anyhow.”

She also highly recommends business interruption coverage.

“It is a very valuable coverage,” she said. “The most difficult thing is calculating how much is needed to keep business operations going if you are displaced or have to keep paying employees depending on how long you are out of you regular location. There are a lot of considerations, but your agent can help you think through all of that.

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