Barbour signs Mississippi wind pool bill into law
Published 6:32 pm Friday, March 23, 2007
Gov. Haley Barbour on Thursday signed a new law designed to shore up Mississippi’s insurer of last resort and to bring economic stability to a state still recovering from Hurricane Katrina.
After Katrina plowed across the state Aug. 29, 2005, insurance prices for homeowners and businesses increased sharply in some areas, stagnating redevelopment on the coast.
The bill Barbour signed Thursday is designed to strengthen the Mississippi Windstorm Underwriting Association, often called the wind pool. The association provides coverage in areas insurance companies deem too risky. The bill became law immediately.
“One of our goals here, one of the purposes of the wind pool, is to make insurance available and to make it affordable,” Barbour said. “By keeping these rates lower, we not only keep rates lower for people on the coast, we keep rates lower for people all over the state.”
The law gives the state’s roughly 32,000 wind pool policy holders a price break on premiums, which Barbour said would lower rates statewide. Lawmakers had estimated the relief would be $500 a year for each policy holder. It will be provided for four years from taxes paid on insurance policies throughout the state.
However, Barbour said at the bill signing that he was not sure how much of a break each policy holder could expect.
“I would simply be guessing,” the governor said.
Barbour said the price break for policy holders would come from the millions of dollars in federal grants for reinsurance and from $20 million a year that would be taken from the collections on insurance premium taxes statewide — $80 million over four years.
If any company wants to write policies in Mississippi, it must pay assessments to the wind pool. Companies that offer policies in the high-risk areas can write themselves out of the assessment, but many have chosen not to do so.
Because the companies writing in the state pay assessments to the wind pool, people throughout the state saw rate increases on insurance, even in northern areas where there was little or no damage.
In the 19 months since Katrina, lawmakers have been trying to find ways to keep insurance affordable. Many coast leaders had complained that residents in the southernmost counties could not afford insurance and therefore could not secure mortgages to rebuild.
Insurance Commissioner George Dale said the legislation will keep insurance companies in Mississippi, spur competition and make rates affordable.
“You can expect certain areas of the state immediately after the signing of this bill to see some reduction in rates and our job is to push that line further and further south until it gets to our folks on the Gulf Coast,” Dale said.
Senate Insurance Committee Chairman Dean Kirby, R-Pearl, says the legislation is as much about economics as it is insurance.
“This is as close as we could come to a short-term and long-term solution to affordability and availability,” Kirby said.
The bill is House Bill 1500.