Barbour: Miss. receives grant to stabilize wind pool
Published 4:43 pm Wednesday, April 4, 2007
Mississippi has received a $30 million federal grant meant to stabilize commercial insurance rates on the hurricane-damaged coast, but officials said it’s only a temporary fix to a long-term problem.
Gov. Haley Barbour and Insurance Commissioner George Dale held a news conference Tuesday to announce that the federal money has been turned over to the Mississippi Windstorm Underwriting Association, also known as the wind pool.
The money will help reduce commercial rate increases from 268 percent to 142 percent above the cost of insurance before Hurricane Katrina hit August 29, 2005, Dale said.
Dale said the $30 million grant is only a temporary solution, meant to alleviate an insurance crisis until the “voluntary market” rebounds from the hit it took from Katrina.
“It’s superficial money. It’s an effort to hold the rates down superficially until the free enterprise system and competition are able to kick in,” Dale said.
The high rates have hindered redevelopment on the coast, and any relief would be welcome to the business owners who want to rebuild.
“If you can’t insure it, you can’t finance it, and if you can’t finance it, you usually can’t build it,” Barbour said.
Barbour said the grant money will be used by the wind pool to buy reinsurance, therefore lightening the burden on policy holders whose only option for coverage is the wind pool, the insurer of last resort.
The wind pool offers insurance in areas deemed too risky by private companies through assessments charged to each insurer that writes policies anywhere in the state. The system caused rates throughout Mississippi to increase after Katrina, even in northern areas where there was little or no damage.
Dale said the wind pool serves about 33,000 customers. Those policy holders could get a price break on premiums because of the federal grants and $20 million a year that is to be taken from the collections on insurance premium taxes statewide.
Lawmakers spent months working on the legislation. Barbour signed the bill March 22 and it became law immediately.