Mississippi Gov. Haley Barbour has vetoed a bill that would have continued a program that designated part of the state’s insurance premium tax to fund the state’s property insurer of last resort.
Barbour said the state has fulfilled its $80 million commitment to the insurer and additional support was not needed.
Since 2007, the state has diverted $20 million in insurance premium tax revenues a year into the Mississippi Windstorm Underwriting Association Reinsurance Assistance Fund, known as the Wind Pool, an insurer for those who cannot obtain private insurance.
The premium diversion was aimed at helping to defray the cost of reinsurance, lowering the risk for insurance companies writing policies in Mississippi, and reducing insurance premiums on the coast. In June 2008, Wind Pool rates were cut 11 percent on average.
Barbour said Mississippi has made good on its promise to pay $20 million during fiscal years 2007 through 2009. For Fiscal Year 2010, the state has already deposited $10 million into this fund and is slated to pay the remaining $10 million before June 30, 2010.
Barbour said that at the end of this fiscal year the state’s obligation to the Wind Pool will have been fulfilled, rendering the legislation unnecessary.
Backers of the measure said the subsidy is still needed to offset rising reinsurance costs and Wind Pool premiums for homeowners. However, others have warned that the state runs the risk of making the Wind Pool too large if it continues to put money into it and lower costs to insureds.
Many private insurers left the Gulf Coast in the aftermath of Hurricane Katrina and have not yet returned. That has forced many property owners to rely on the Wind Pool program as their insurer. It now covers more than 42,000 homeowners.
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