Wind subsidies for Mississippi

Mississippi Insurance Commissioner George Dale told members of the state’s House and Senate insurance committees that preliminary estimates show a $30 million government subsidy would cut commercial insurance rates by about half.

“That is not written in stone yet because we are waiting for our actuaries to come back to us and they are still crunching the numbers,” Dale said.

Lawmakers have been discussing ways to reduce commercial rates that ballooned 298 percent after Hurricane Katrina. Residential rates increased 90 percent. The Mississippi House has already approved putting $30 million into the wind pool program. The House vote was 119-1. The proposal is now in the Senate.

Gov. Haley Barbour has said he wants to spend federal money, rather than state money, to shore up the Mississippi Windstorm Underwriting Association.

Sen. Dean Kirby, R-Pearl, chairman of the Senate Insurance Committee, said lawmakers want to bring relief to coastal residents and business owners. “This is as much an economic development bill as it is an insurance bill,” Kirby said. “People can’t build if they can’t finance, and they can’t finance if they can’t get insurance.”

The state’s windstorm pool assesses companies to provide coverage in areas most insurers deem too risky.

Dale used Shelter Insurance Co. as example. The company had no policies on the coast but was forced to ask for a 27 percent rate increase for policyholders as far north as Tupelo to cover its assessment for the wind pool, he said.

“So the guy in Tupelo with Shelter is looking at a 27 percent rate increase when really they had a good year,” Dale said.

It leads to even more problems when insurers write fewer policies to lower their assessment percentage in the wind pool, he said.

A $30 million subsidy wouldn’t help residents. “To affect residential rates, we’d need at least another $100 million,” Kirby said.