Shumaker must be versatile at the state rating bureau
Joe Shumaker has had a long career with the Mississippi Rating Bureau, where he began working at age 20. He currently wears three hats as manager of the three separate entities at the bureau. There’s the Mississippi Rating Bureau, established by state law in 1924, which administers the other two organizations; the Mississippi Wind Storm Underwriting Association; and, the Mississippi Residential Property Insurance Underwriting Association. Each company has a governing board and all were established by state laws, but they are not state agencies. The Rating Bureau does commercial property inspections, investigates code enforcement and evaluates communities on fire protection, assigning the protection-level numbers that are important for the cost of residents’ insurance.
With a staff of 56, Shumaker manages them all and explains that the sometimes-misunderstood associations are residual insurance pools — or insurance of last resort — for basic fire insurance throughout the state and for wind storm or hurricane damage in the coastal counties.
“We write coverage for the people who are not able to get coverage elsewhere. These are residual insurance markets,” he said. “The associations were established to provide basic insurance coverage for wind and hail and fire for those people who for whatever reason can not obtain it through regular insurance markets. I like having the satisfaction of providing needed services to people who cannot get them elsewhere.”
Shumaker started in the Rating Bureau in 1980 where he did property inspections and spent 18 years in the public protection department. Ten of those years were as superintendent of that department, evaluating fire protection throughout the state. In 1998 he was promoted to assistant manager, which meant he became less involved with the rating function and more with administration. In Jan. 2007, he was promoted to manager. Shumaker took the helm at a time when many Coast residents were struggling with rebuilding and insurance issues which made wind storm premiums sky rocket and forced many more homeowners into the high-risk pool.
“The challenge is maintaining day-to-day operations and helping people understand,” he said. “Currently, we’re approaching about 60,000 policy holders in both associations.”
He points out that of those 60,000 policy holders, 46,000 are in the Windstorm Underwriting Association with the remainder in the group providing basic fire coverage. Prior to Hurricane Katrina, the Windstorm Association had only 16,000 policy holders.
“We’re preparing ourselves, mostly on the wind side, for catastrophic events,” Shumaker said. “We were much smaller before Hurricane Katrina. Our challenge is to be prepared for the next one. We hope everyone can find coverage elsewhere, but for those in the pool we want to provide the best service we can.”
He says it’s important to note the association paid out $710 million to the 16,000 policy holders who were in the wind pool at the time of Katrina, forcing a sharp rise in premiums post-Katrina. “I collect $12,000 per year so almost 60 years of collections was paid out,” he said. “Fire coverage is not subject to huge catastrophes but it’s still fairly high. We pay about $4 million a year out of $7 million collected.”
Long considered fire coverage for residents in rural areas, the Mississippi Residential Property Insurance Underwriting Association provides this residual insurance for a number of reasons. “The market tightened up and rates were getting high,” he said. “In the 1980s, companies were reluctant to write coverage in rural areas where residents didn’t have protection. The Legislature created the rural risk pool. Since then we’ve seen insurance rebate money and an emphasis on creating rural fire departments and other safeguards. So, the legislation has worked.”
Most of the time this coverage is for people who for some reason have had poor loss experience or maybe have homes not built to high standards. Many states have this type of coverage, referred to as fair play insurance. “We make sure policy holders are taken care of and that at the same time we’re encouraging the market to come back; keeping stability so insurance companies want to do business in Mississippi,” he added.
Shumaker grew up in Brandon and went to school there before his family moved to Ludlow in Scott County. The 51-year-old has enjoyed his 31 years at the Mississippi Rating Bureau where he’s developed respect for individuals working in fire service. “I’ve also made a lot of friends among fire departments and with city officials,” he said. “Here on the insurance side, I’m learning a whole other realm with agents and others in the business. I’ve said if I ever found something I’d rather be doing, I’d go do it, but I don’t know what that would be, and I’m not done here yet.”
He still lives on a farm in Scott County with Janice, his wife of 27 years, and their daughter, Carmen. Their son, Patrick, is attending Mississippi State University.
Describing himself as a simple country boy, Shumaker enjoys working on the farm, fishing and hunting when not working. He’s a charter member of the Ludlow Volunteer Fire Department — and continues to serve as a firefighter — and is a deacon at the Ludlow Baptist Church.
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