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With some people paying more than three times what they were, affordable insurance plagues Coast’s recovery


Nearly four years after Hurricane Katrina, the Mississippi Gulf Coast remains a shell of its former self. While many challenges have been met, the lack of affordable insurance continues to plague the region’s recovery.

Mississippi Insurance Commissioner Mike Chaney said that insurance rates, particularly on the residential side, vary greatly from street to street on the Coast. Property owners near the water are sometimes paying 300 percent more than they were pre-Katrina. And, it is not getting any better.

Marty Milstead, executive vice president of the Home Builders Association of Mississippi, said, “I’ve heard some reports of things getting worse. Flood insurance has escalated.”

Coast homeowners got another piece of bad news earlier this month. State Farm, after a two-year hiatus, announced June 9 that it was resuming the writing of new homeowners insurance policies in Mississippi — except in the three coastal counties of Hancock, Harrison and Jackson.

“The residential insurance market is tough, especially south of I-10,” Chaney said. “We’ve made progress, but no, I’m not pleased. There is a lot of work to be done.”

Chaney reports better news on the commercial insurance front. Comparing 2009 to 2008, the market has remained basically flat and competitive.

Perry Nations, who heads up the Mississippi chapter of the Associated General Contractors, said many of the immediate post-Katrina challenges such as housing for workers and other logistical challenges to rebuilding are no longer factors, though the lack of skilled craftsmen remains an issue. However, the insurance problems, namely the lack of settlements as owners and insurers continue the wind-versus-water legal debate, are the major obstacle to rebuilding the Coast’s business and industry.

“Construction is good on the Coast, but it will be another few years before we see some of these settlements,” Nations said.

As with seemingly everything concerning affordable insurance on the Coast, even the good news potentially has a down side. The Wind Pool rate has decreased on average 11 percent across the board and has been level in 2009. The Wind Pool was intended to be the insurer of last resort.

However, Chaney is concerned that the Wind Pool may become the first choice of insurance because of its affordability. If more owners turn to the Wind Pool for insurance, that would necessitate the pumping of more money into the program.

One of the factors affecting Wind Pool rates is insurers requiring homeowners to cover the replacement cost of their homes, as opposed to the cash or mortgage value. In some cases, this doubles homeowners’ premiums.

Flood insurance is another issue. Chaney has told those writing Wind Pool policies that their policyholders must carry national flood insurance if in a flood zone. Otherwise, Chaney will not let the Wind Pool write those policies.

Chaney says he believes the only long-term, viable solution to the lack of affordable homeowners insurance is the establishment of an enforceable building code, building above the floodplain and proper land use. That would bring insurance rates down.

Unfortunately, he is not seeing much movement in those areas. He is also upset — “ticked off,” he said — that the state has taken grant funds he wanted to go toward retrofitting existing structures to make them more storm-proof and instead awarded them for affordable housing projects on the Coast. He sees this as short-sighted. He says there are more than 3,000 homes and multi-family buildings standing vacant on the Coast. Why not put people in them, as opposed to building more affordable housing that does not meet stricter building codes and thus does not help solve the Coast’s problem of a lack of affordable insurance?

Chaney said he looks forward to an insurance forum that will be held July 16-17 at the Imperial Palace in Biloxi in conjunction with a meeting of the National Governors Association. He hopes that forum will allow the issues to be debated and potential solutions offered.

A piece of good news is that the Mississippi Insurance Department’s (MID’s) Wind Mitigation Program study is approximately 33 percent complete. In February, the MID received a $1-million grant from the Mississippi Development Authority and the Governor’s Office to conduct a hurricane home mitigation study that Chaney said would pave the way for $25-million in hurricane home mitigation assistance for Gulf Coast homeowners.

“The key to recovery on the Mississippi Gulf Coast is jobs,” Chaney said. “Without jobs, we don’t have people, and without people, we don’t have homes, and without homes, we don’t have an economy. The Coast must build to codes, have proper land use and mitigate homes to withstand hurricanes.”


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