The cost of insurance continues to be a common lament among homeowners in the state’s three coastal counties. As more insurance companies write coverage in Mississippi, will competition cause costs to decrease? Should anyone contemplating the purchase of a home buy now before insurance prices increase more?
State Insurance Commissioner Mike Chaney isn’t dispensing advice on what individuals should or should not do regarding home purchases, but he does assess the overall condition of coastal insurance in a positive light. “It’s improving due to the addition of new companies, mitigation discounts and limited grant funds for retro-fit mitigation,” he said. “We have more homeowner companies ‘in play’ on the Coast than we have ever had when you include the surplus lines companies.”
As for rates increasing, Chaney says rates have gone up, varying by company and property location. “Rates in the coastal counties have increased from 20 to 65 percent since Hurricane Katrina. Some specific companies have gone up more than 150 percent, but their market share has decreased by 50 percent,” he said. “The Mississippi Insurance Department encourages consumers to shop around and know what their coverage is.”
Veteran Bay St. Louis insurance agent Angelyn Treutel, president of SouthGroup Insurance-Gulf Coast, points out that insurance comes in so many different types and packages, making shopping for insurance confusing. “Each company has different guidelines and coverage,” she said. “The good news is that we have more carriers writing property insurance on the Coast. Several are writing with wind coverage included, but each company has different criteria, and they typically prefer to write newer homes or homes more than one mile from water. More competition in the marketplace leads to better pricing and more options for coastal consumers.”
There has been no major storm in coastal Mississippi for eight years, and Treutel says the coastal market is better each year that goes by without such a storm. Chaney recommends that homeowners shop around and mitigate by making their homes stronger and more resistant to storms.
Treutel, who is also a CPA, said, “Homeowners need to do whatever they can to make their property more attractive to the insurance marketplace. There are many variables that affect home rates, including credit, prior claims, type of home construction – better built construction means lower rates – age of home, age of roof, bundling policies with same carrier, taking higher deductible options and carefully selecting only desired endorsements.”
Additionally, she says most of the better carriers offering the better rates are now more closely scrutinizing the homeowners’ pride of ownership, which means the companies conduct a thorough inspection of the property to determine how well the property is maintained and kept free of hazards, such as having tree limbs on the roof or shrubs rubbing the sides of a home, which can damage the structure, and checking that the property is free of yard debris.
“Some homeowners have been displeased with the carrier’s inspection process and the resulting requirements to make repairs or cut tree limbs in order to retain their coverage,” Truetel said. “The insurance companies are imposing the requirements to reduce hazards, and by doing so they can offer better pricing to consumers.
“If a homeowner chooses not to comply with the requests, then their coverage must be re-written with a higher-priced insurance provider. This practice has been followed for many years for business and commercial insurance, and now we are seeing it occur much more in the personal lines arena.”
Many coastal residents – depending on location – are required to carry wind coverage and national flood insurance; both can be pricey. The lack of wind coverage provided by private carriers forced a large number of homeowners into the State Windpool, insurance coverage of last resort. However, with more companies willing to write wind coverage, Chaney says the number in the windpool is not increasing. “It remains level, but we see some potential de-population of the windpool.”
As of late 2012, there were approximately 75,000 flood insurance policies in force in Mississippi through the National Flood Insurance Program (NFIP), according to Chaney. With a move in the U.S. Congress to raise NFIP rates, Chaney’s office, insurance agents, realtors and bankers are watching developments closely. Large rate increases have been delayed for another year, and coastal residents will continue to monitor the situation.
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