Mississippi will use $50 million in federal grant money to ease the sticker shock of an anticipated rate increase for wind-pool coverage of homes in the hurricane zone, officials said Wednesday.
Gov. Haley Barbour and Insurance Commissioner George Dale announced the plan during a news conference in Biloxi. Barbour said the U.S. Department of Housing and Urban Development has given the state permission to use $30 million this year and up to $20 million next year for the wind-pool expenses.
“This $50 million will help immensely to keep insurance rates affordable,” Barbour said.
The Mississippi Windstorm Underwriting Association, commonly known as the wind pool, has asked Dale to approve a 397.8 percent rate increase for thousands of coastal homes.
Dale said he needs two or three more weeks to decide how much of a rate increase to approve. He said that because of the infusion of federal money, the increase will be “considerably less” than the requested amount.
“I’d rather not give a figure that may not even be in the ballpark,” Dale said, adding that officials need time to analyze numbers.
The wind pool was created by the Mississippi Legislature as the state struggled to recover from the devastation of Hurricane Camille in 1969. It is intended to provide insurance on property that individual companies won’t cover.
Greg Copeland, the wind pool’s attorney, said during a public hearing last week that the rate increase is not needed to cover damages from Hurricane Katrina, but to buy reinsurance, which is insurance for insurance companies.