Mississippi’s insurance commissioner is pushing a bill to strip a tax subsidy and authority from the state’s insurer of last resort for hurricane-prone coastal residents.
Commissioner Mike Chaney says the Mississippi Windstorm Underwriting Association, known as the “wind pool,” spends too much on backup insurance. The move would bolster his authority in his dispute with the board that runs the pool.
Chaney said the measure will make premium increases less likely on the pool’s 25,000 policyholders in six coastal counties. Customers there pay $1,700 on average to cover only wind and hail.
The number of policies has been falling in recent years, in part because rates are deliberately kept high to encourage property owners to buy insurance from other carriers. Policies in the pool ballooned after 2005’s Hurricane Katrina as traditional insurers balked at covering coastal risks.
House Bill 948 requires Chaney’s approval before the pool can buy more backup coverage, known as reinsurance, above a certain level. Chaney said he’s been imploring the board that runs the pool to buy less reinsurance for years. The pool spent $38.4 million last year to buy enough coverage to cover $910 million in losses.
Chaney said his office will release an audit on how much reinsurance the board buys and what it pays. He added Alabama’s pool paid only $15 million in 2017 for roughly the same amount of insurance.
Pool manager Joe Shoemaker said that if the pool were to run out of money after a severe hurricane, insurance customers across the state would be forced to make up the shortfall. Shoemaker said the pool board wants to avoid such an assessment.
The bill also requires the pool to self-insure at least $100 million in risk, using the $250 million the pool has built up from premiums and public subsidies. Chaney said that will allow the pool to spend less on reinsurance in years without a storm. Shoemaker said that would deplete the pool’s reserve if a hurricane strikes.
The bill would also divert $3 million yearly in insurance fees that have been subsidizing the pool since after Hurricane Katrina to help buy rural fire trucks.