Gov. Haley Barbour on Friday rejected a proposal to put a $20 million subsidy into a wind pool insurance fund.
To do so, Barbour vetoed part of the state Department of Insurance budget.
He said the $20 million is part of a Hurricane Disaster Relief Fund that might have to be tapped to repay $400 million in federal hazard mitigation expenses.
The Mississippi Windstorm Underwriting Association, often called the wind pool, is the insurer of last resort for homeowners and commercial property in high-risk areas.
After Hurricane Katrina struck in August 2005, rates by many private insurance companies increased sharply. Some property owners have relied on the wind pool because they’ve been unable to find affordable private insurance, but some officials want to nudge people back into the private insurance market.
“While I continue to believe the state must focus on lowering insurance rates along the coast, I believe a long-term approach requires us to focus on strengthening construction instead of continuing to subsidize insurance policies through the wind pool,” Barbour, a Republican, said in a news release.
Democratic state Rep. Brandon Jones of Pascagoula said Friday that Barbour’s veto of the subsidy could cause coastal insurance rates to jump by 2012.
“This is too soon to declare ‘mission accomplished’ across the Gulf Coast,” Jones said. “The insurance challenges we face nearly five years after Katrina are considerable and will take a variety of approaches to solve. While I agree with the governor that mitigation is important, we can do two things at once. We should support the wind pool until a mitigation program bears fruit or until the private market recovers.”
State Insurance Commissioner Mike Chaney, a Republican, said he expects wind pool rates to remain steady this year and possibly next.
“In the previous fiscal year, the Legislature had given the wind pool an extra $20 million in subsidy, which I held in reserve to maintain level rates in case there was a budget shortfall, which has now happened,” Chaney said. “With these reserves we are able to maintain stable rates throughout the remainder of this year and, through careful negotiations with reinsurers, possibly next year as well.”
Chaney said property owners can lower their premiums by taking steps to reduce possible damage in a hurricane, for example, by installing hurricane straps to strengthen the roof. He said he’ll announce a $20 million hazard mitigation program next week for homeowners on the coast.
The bill is House Bill 1642.
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