Supporters See $40 Million in Mississippi Windpool Subsidies As Economic Stimulus

Mississippi Gov. Haley Barbour has signed legislation to help control insurance costs for coastal property owners.

Business supporters of the bill contend it will also serve as an economic stimulus.

The bill appropriates $40 million for the state run windpool (the Mississippi Wind Underwriting Association), which provides coverage for those unable to buy private insurance. That was $20 million more than previously appropriated.

The infusion of funds should mean that residential and commercial property owners who have coverage through the windpool will be protected against rate increases.

According to Insurance Commissioner Mike Chaney, the money is earmarked to purchase reinsurance for the windpool. Chaney said how much rates might be affected will depend on the cost of reinsurance. He said the decision on future rates is up to the board of the MWUA, although he does have some input into their decision.

“I can say that I believe this will keep rates from being increased and keep rates competitive,” the commissioner told Insurance Journal.

Chaney also noted that the windpool will also offer up to 25 percent discounts for mitigation efforts.

According to the legislation, $20 million will come from the MWUA’s Reinsurance Assistance Fund and the added $20 million will be taken from the state’s Hurricane Disaster Reserve Fund

The state has given the windpool funds in previous years as well.

The windpool funding measure was a priority for Chaney and for the Mississippi Gulf Coast Business Council (MSGCBC), which backed it as way to boost the state’s economy.

A study by Mississippi State University’s John C. Stennis Institute of Government for the GCBC earlier this year cited the negative effects of high insurance costs on new home construction and sales, consumer spending and rebuilding efforts in the area. In particular, the study found that if 90 percent of the $20 million grant to the windpool is passed through as a rate reduction to policyholders, it could generate at least $26.9 million in additional tax revenues to the state, 715 jobs in the local economy and an increase of $72 million in consumer spending.

The Stennis/GCBC study actually called for giving the windpool a minimum of $20 million a year beginning in 2009 and lasting through 2011 as part of a short term plan to “stimulate the economy along the Mississippi Gulf Coast for two to three years while long term solutions are cultivated and the private market is given additional time to return.”

The MWUA funding measure was co-sponsored by Rep. Brandon Jones (District 111) of Pascagoula. “It is my hope that the insurance relief provided under this bill will encourage Gulf Coast residents to move forward with their rebuilding projects and that businesses who have been waiting for some good news on the insurance front will go ahead and invest in south Mississippi,” he told Insurance Journal.

Insurers also supported the funding.

“This is an important measure for Mississippi consumers, the state’s economy and future economic development along the coast,” said William Stander, assistant vice president and regional manager for the Property Casualty Insurers Association of America (PCI).

Topics Mississippi