Mississippi Bills Seek More Insurance Company Cost Disclosure, Deductibles Regulation

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Mississippi lawmakers could require insurers to disclose how much they collect in premiums and how much they pay in claims in each ZIP code under a bill advancing in the state legislature.

House Bill 753 could spark more debate over how much coastal homeowners are charged to cover against hurricanes, as well as make it clearer what areas private wind insurers are avoiding.

The House Insurance Committee passed the bill Tuesday, as well as another measure, House Bill 756, which would regulate when insurers can charge homeowners a hurricane deductible. Both go to the full House for more debate.

The disclosure measure, called the “Clarity Act” by its supporters, is modeled after a similar law that was passed in Alabama. There, an initial round of disclosure has shown coastal homeowners have paid far more in premiums than they got back in claims in recent years.

“Our suspicions were we were being overcharged on the coast and we got very clear confirmation of that,” said Stan Virden, a Gulf Shores, Ala., man who is active in a group called the Homeowners Hurricane Insurance Initiative.

Rep. Scott DeLano, R-Biloxi, is sponsoring the Mississippi bill. He shied away from claims that coastal residents are being overcharged, but says he wants to learn more about where on the Mississippi coast private insurers are refusing to write policies covering wind damage. Many of those homeowners end up buying policies from the state-sponsored Mississippi Windstorm Underwriting Association.

DeLano said the bill would also help determine the accuracy of computer models that predict possible future damage for insurers. The large costs forecast by those models are a key factor in driving up rates, along with the need for insurers to spread out their risks by purchasing reinsurance policies. DeLano has filed the bill for three years, but this is the first time it’s been passed by committee.

The bill requires companies currently doing business in Mississippi to report premiums and claims payments back to 2005, the year Hurricane Katrina slammed the state. Some companies stopped doing business in Mississippi after the storm, but for those that remain, the bill could also provide a better look at how much was paid out then. Some consumer advocates contend that wind insurers wrongly denied large numbers of claims after the storm.

“It’s going to hopefully shed a lot of light on how many claims were denied or not paid after Katrina,” said Kevin Buckel, a Long Beach man who’s pushing a separate bill to enshrine in law a court ruling that put the burden of proof on insurers.

House Bill 756, also sponsored by DeLano, would require Insurance Commissioner Mike Chaney to make rules on when a hurricane deductible applies. Now, rules vary on when homeowners pay the higher deductible, often 5 percent of a house’s insured value instead of the $1,000 deductible that’s common inland.

Hurricane deductibles shift risk to homeowners, meaning they get less coverage even though they’re usually paying more for insurance. In some other states, insurance regulators have blocked hurricane deductibles for storms they judged were too weak to qualify.

“There’s a lot of ambiguity on the coast from policy to policy and homeowner to homeowner when a hurricane deductible is due,” DeLano said of his push to standardize the rules.

The rules would say that shift could only happen beginning when a hurricane watch or warning is issued somewhere in Mississippi and that it would end 24 hours after the last hurricane watch or warning in Mississippi.