Rep. Taylor Frustrated Over Failure of Windstorm Coverage Add-On

In Pascagoula, Miss., on the Gulf Coast, agent Laverne Nelson has to get windstorm coverage for her personal property from the state wind pool.

That is because in April her property insurer, MetLife Property & Casualty, dropped her wind coverage. Before that, she says the cost of her coverage had doubled over the past few years.

Nelson, of McIlwain-Wells and Nelson Insurance, is just one of many residents in the towns devastated by Hurricane Katrina who continue to struggle with the price and availability of property insurance.

“The cost of insurance around here is astronomical,” Nelson says.

For the past three years, Rep. Gene Taylor (D-Miss.) has tried to help the people like Nelson who live in the regions devastated by hurricanes Wilma, Katrina, and Rita, with a proposal to add wind-damage coverage to the flood protection afforded by the National Flood Insurance Program (NFIP).

But many say his proposal is not a good idea and is not going to happen.

Taylor first put forth a bill to add wind coverage to the NFIP in 2007. It never made it out of congressional committee. So, in 2009, he introduced his present bill, H.R. 1264, the Multiple Peril Insurance Act.

The bill stems from Taylor’s personal experience after Katrina. His own house in Bay St. Louis, Miss., was leveled by the hurricane, and he says he watched as he and many of his neighbors had their insurance claims denied and deferred for a long time in disputes over whether the damage their properties sustained were caused by wind or water.

His bill is intended to prevent such disputes in the future. It would also make affordable wind insurance available in coastal areas where it is not now.

Taylor’s H.R. 1264 was scheduled to be introduced for a vote late last month. However, at the last minute it was pulled back. Observers have said they suspect the House party leadership pulled the bill because they knew it would fail the vote.

Opposition to the bill has been widespread and intense. The Property and Casualty Insurers Association of America (PCI) opposed the bill because it would take away what is now a private business, without any guarantee that the government action would bring the cost down. PCI said that more than 47,000 private jobs would be lost to Washington if the measure is adopted.

“We appreciate Rep. Taylor’s attempt to help his constituents, but we really don’t believe that his bill is the appropriate solution,” said Don Griffin, a vice president with PCI.

PCI has also noted that the NFIP is struggling right now, with a debt of about $19 billion and so now may not be the time to increase its responsibilities.

The Obama Administration also opposed the bill, reiterating objections of the insurance industry: “Expanding the NFIP to cover windstorm insurance would unnecessarily duplicate available insurance products and could ‘crowd out’ such products when they are offered, while offering little savings to the American public.”

Even environmental groups, including the World Wildlife Fund and the Sierra Club, have lobbied against the bill, arguing that it would encourage more development in coastal areas.

While H.R. 1264 could be reintroduced, most consider that unlikely.

Taylor and his staff are highly frustrated. Last month, Taylor laid into the insurance industry in comments to the Biloxi Herald, saying that the insurance industry had “broken out all the stops” to oppose his bill. “They can hire a lot of lobbyists and dump a lot of money into campaigns,” he said. “It will, unfortunately, probably take a major East Coast hurricane, with some other people suffering as we suffered, for us to pass insurance reform,” he also said.

Brian Martin, a staff person in Taylor’s office, told Insurance Journal that the situation in Mississippi had continually been “misrepresented” by critics.

He said that building safety in vulnerable areas is improving but insurance still is not available. “There are a few companies still writing on the coast, but they are cherry picking the low-risk, well-built properties,” Martin said.

The state wind pools on the Gulf have picked up some of the slack but few believe that is the answer. The wind pool in Mississippi now has $6 billion in exposure, which is much more than it can cover.

“Any major hurricane hits any one of these states . . . the wind pools are insolvent,” Martin said.

All of which leaves many Gulf residents angry and unsatisfied as they brace themselves for the next, inevitable storm.

Said Connie Moran, the mayor of Ocean Springs, Miss., when she was asked if the insurance situation was improving in any significant way: “Nothing has changed since Katrina.”

Topics Catastrophe Natural Disasters Windstorm Property Hurricane Market