Mississippi Gets New Property Insurer: Coastal American

A newly-formed Mississippi company with backing from a Florida insurer and local private investors including six independent agencies will begin writing homeowners policies on the coast in Mississippi.

Gulfport-based Coastal American Insurance Co. says it will give coastal Mississippians a break from high premiums they are now paying for coverage from private insurers and the state’s wind pool.

The company will write up to 1,000 homeowners policies with wind coverage in the state’s six coastal counties “all the way down to the water’s edge” between now and the time the hurricane season ends, according to Ned Dolese, marketing manager for Coastal American and a key investor.

Capping the number of policies in the first five months will assure that the new insurer can handle claims should a major storm hit, he said. “We want to be able to survive a storm and price reinsurance we can afford,” he told Insurance Journal.

The insurer will target homes valued between $150,000 and $250,000. The average house with coverage from the wind pool is valued at about $188,000.

Coastal American will require its coastal customers to also purchase flood insurance. However, even with this requirement-which Dolese said Mississippi regulators reviewed and approved-homeowners should still pay less than they do now and also be covered for flooding.

He said the insurer will coordinate any claims between wind and flood coverages when there is a question if damage was caused by wind or water.

Around Nov. 1, after the wind and hurricane season is over, the company will begin offering standard homeowners policies without wind coverage to coastal residents, as well as selling in the rest of the state.

Coastal American received its license effective Jan. 1, 2010. The company is starting with $5 million in capital-all equity, no debt. Sunshine State Insurance, based in Florida, owns 27 percent, while six local agencies own about 20 percent.

The remaining private investors include Dolese, who is starting an insurer because he is frustrated with his own insurance options. As a coastal property owner, he says he got tired of paying high premiums and seeing other property owners struggle with high insurance costs. He said that “after screaming at my insurance agent for years,” he decided to do something about it.

His agent, John “Shorty” Sneed, president of the Gulfport, Miss., office of Stewart, Sneed, Hewes, a division of Bancorp South Insurance, is now one of the investors in the new company.