Insurance Dept. Approved Miss. Homeowners Rate Increases Before Hurricane Katrina

December 12, 2005

Recent increased in homeowners insurance rates in south Mississippi can not be attributed to Hurricane Katrina, according to Insurance Department officials, who indicate that Allstate, USAA and the Southern Farm Bureau all filed for and received rate increases before Katrina struck Aug. 29.

Insurance Commissioner George Dale told the Jackson Clarion-Ledger, it’s too early to predict what effect Katrina will have on insurance rates, but said he expects changes.

“Katrina has not been factored into any rates,” said Dale, who met recently with 11 insurance executives. “The message (from the insurance executives) was, ‘We intend to continue to write (policies) in Mississippi’.”

Dale expects rates for homeowner insurance to rise and also believes companies will refer more homeowners to the insurance provider of last resort, the wind pool.

The Legislature created that pool in 1987 to write wind and hail policies in the six south Mississippi counties, Hancock, Jackson, Harrison, George, Stone, and Pearl River. Insurance companies writing homeowner, fire, and allied policies own and support the pool.

Albert Parks, the wind pool manager, said pool insurance costs about 10 percent more than private coverage. The pool currently underwrites 16,200 policies, but Parks expects that number to grow.

Bill Bailey, director of the Hurricane Insurance Information Center in Jackson, agrees with Parks.

“Companies are going to start looking very long and hard at how much capital they’re committing to waterfront and near-waterfront properties and how much that’s affecting their ability to do business,” Bailey told the Clarion-Ledger. “I would expect there will be some lines of demarcation where, if you’re looking at wind insurance coverage, you’ll have to go to the wind pool.”

Household insurance bills also will increase as property owners add flood insurance. Only 22,312 flood policies were in force for the six South Mississippi counties before Katrina hit, according to the National Flood Insurance Program.

Many homeowners learned only after Katrina that their policies did not cover damage from tidal surge. Also, FEMA, which administers the flood insurance program, conceded that flood maps were seriously outdated and understated the risk along the coast.

Unlike the state’s wind pool, flood insurance is federally funded. Both wind and flood coverage are available through private insurance companies.

Flood insurance rates are expected to go up May 1, with an overall rate increase of 4.1 percent. The Mississippi Insurance Department said more than $5 billion in Katrina flood and wind claims have been paid.

Topics Trends Catastrophe Natural Disasters Flood Pricing Trends Mississippi Hurricane Homeowners

Was this article valuable?

Here are more articles you may enjoy.