Sen. Dean Kirby says slashing prohibitively high insurance rates on the Mississippi coast is as much about economic development as it is about insurance.

Kirby, chairman of the Senate Insurance Committee, made the comments after lawmakers met Thursday to discuss ways to reduce commercial rates that ballooned 298 percent after Hurricane Katrina. Residential rates increased 90 percent.

“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.”

State Insurance Commissioner George Dale told members of the House and Senate insurance committees that preliminary estimates show a $30 million government subsidy would cut the commercial 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.

Kirby, R-Pearl, said lawmakers want exact numbers so they can draft legislation within weeks to bring relief to Mississippi’s coastal residents and business owners.

“The rates on the commercial side have brought development to a standstill — an absolute standstill,” said Sen. Billy Hewes III, R-Gulfport.

Higher insurance rates are a concern statewide.

The Mississippi Windstorm Underwriting Association — the insurer of last resort, often called the wind pool — assesses companies throughout the state to provide coverage in areas most insurers deem too risky.

Dale used Shelter Insurance Company as an 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 in an attempt to lower their assessment percentage in the wind pool, he said.

A source of the subsidy money has not been established. Gov. Haley Barbour says he would rather try to get federal funding than to spend state money.

A bill awaiting consideration in the House would put $30 million of state money into the wind pool to mitigate the rate increases for commercial insurance.

Kirby said after the meeting that a $30 million subsidy wouldn’t affect residential rates.

“To affect residential rates, we’d need at least another $100 million,” Kirby said.

However, Kirby said, lowering the commercial rates will help drive economic growth on the coast, thereby speeding recovery from the unprecedented storm.

Dale said another option to bring down prices would to be remove from the wind pool the three “tier counties” — Pearl River, Stone and George — that are just north of the three coastal counties.

“While they’re in the wind pool, it just gives insurance companies an excuse to not want to write some of the policies in those three counties,” Dale said. “The only reason they’re in the wind pool, in my opinion, is because the former chairman of the Senate Insurance Committee was from one of those counties and she wanted her county in and it was put in.”

The bill is House Bill 243.