As you are aware, my job as Chairman of the House Insurance Committee changed tremendously after the devastation caused by Hurricane Katrina. Within weeks, I was visiting the disaster area from Pearl River County to Jackson County to observe the damage and to begin collecting data on the losses to the state windpool. It is the responsibility of the House and Senate Insurance Committees to oversee the pool and the laws that define its function. Of the 17,000 policies in effect, one hundred percent had claims with the vast majority reporting total destruction.

The difference in claim loss and cash reserves exceeded five hundred million dollars — that is a half a billion dollars. The private insurance companies that sold policies throughout the state paid their percentage of the loss as required by their mandatory participation in the windpool. Remember, windpool loss hit them after they had already paid the losses for the policies that they had in force throughout the state — most of which had substantial claims. This caused the market to dry up almost overnight. After months of hearings, debate, study, and discussion, the Mississippi Economic Growth and Redevelopment Act was written, and this week, passed the House of Representatives. The Bill now goes to conference with the Senate to begin to work out the minor differences between the two versions.

The act is designed to provide a market for those who have no other access to purchase needed insurance. Thousands of Coast residents are struggling to find affordable insurance so they can begin rebuilding their homes and businesses. Businesses are facing a 268 percent increase in premium costs. It is impossible to acquire a mortgage without insurance.

In the beginning, the “windpool” was to be an insurer of last resort. The goal of HB 1500 is to provide immediate coverage, encourage private insurance companies to begin writing policies and provide an emergency recovery plan in case of another unprecedented hurricane.

HB 1500 would offer incentives—through tax credits—for insurance companies to continue writing policies on the Coast. In addition, it outlines a means of recouping windpool assessments in the event of a catastrophic storm. It also provides tax credits to assist policy holders with the increase in the cost of insurance purchased from the windpool.

Ultimately, the windpool (The Mississippi Windstorm Underwriting Association Reinsurance Assistance Fund) will be funded by the premiums of policy holders. In the meantime, the windpool reserve would be accelerated by the transfer of up to 50 million dollars in federal funds (some of which has already been received), 30 million dollars in one time state general fund appropriations, and approximately 18 million dollars annually from sales tax revenue collected in the six coastal counties (House Bill only).

In the event of a major storm that causes more in damage than the amount of available reserve, the Commissioner of Insurance could implement a surcharge that would be spread over all property and casualty policies throughout the State. In addition, if the deficit in reserves is greater than 100 million dollars, the windpool association would have the authority to issue bonds to cover excess losses. The funds collected from policy assessments would be used to repay the debt on the bonds. It is important to note that this process should not take place except in the event of a storm of such magnitude that the windpool reserves would be depleted.

The House Bill now goes to conference with the Senate in order to work out the few differences in the two plans.