The Mississippi "R" Factor Part 1

We have more insurance news out most of it involving the State of Mississippi. As I noted yesterday the contrast between Commissioner McCarty and the Republican Party in Florida and Commissioner Chaney and the Republican leadership in Mississippi is striking and very unfavorable to our leadership here. Today we are greeted with this news story in the Sun Herald on the Mississippi Windstorm Underwriting Association:

Residential policyholders have been shocked by significantly higher premiums in their wind-pool renewal notices.

Wind-pool board members approved policy changes, effective Oct. 1, that mean higher rates for the majority of policyholders who stick with a 2 percent hurricane deductible. A Sun Herald reader alerted the newspaper to the policy changes Thursday.

Wind-pool board member David A. Treutel Jr., who is from the Coast, said the change was in error. The board, he said, was trying to give the best wind discount possible while keeping options simple. He said the error was brought to the board's attention in January and members voted unanimously to correct it. A correction should apply retroactively to rates charged since Oct. 1.

"The direction from the board was to fix it," Treutel said. "That wasn't intended."

As of now, policyholders who used to have $1,000 or $2,500 deductibles for unnamed storms will feel a pinch unless they raise their named-storm deductibles. Even then, their rates might still increase even though their out-of-pocket expenses will be higher after a catastrophe.

Such was the case for Rex Chastain's family. Chastain had hoped for some insurance relief in 2008, but instead finds his family "insurance poor."

Hurricane Katrina forced the Chastains, along with thousands of other South Mississippi residents, into the state wind pool, where residential rates jumped 90 percent in 2006. The wind pool is the insurer of last resort for 36,000 South Mississippians, who must carry a separate private policy to cover fire, theft and liability.

The Chastains' total homeowner insurance bill jumped 147 percent. (Emphasis mine)

Homeowners insurance has been that dirty little secret buried in the howling wind insurance storm. Coastal consumers are routinely finding their wind excluded homeowners policy costs as much today as their wind included homeowners policies before Katrina. I have not heard of increased fire, theft or liability risk here on the coast since the storm. Curious.

We were also greeted with this story on David Baria and his attempts to pass some common sense legislation in the Mississippi Senate dealing with insurance.

Sen. David Baria has filed seven Hurricane Katrina-related insurance-reform bills, but on Tuesday legislators will finalize the list of measures that stay alive, and his are in danger of dying without a vote.

The first-term legislator, a Democrat from Bay St. Louis, attended the Senate insurance Committee meeting Thursday briefly to see if any of his bills were up for discussion, but was surprised when he found they were not.

Baria has filed a "Policyholder's Bill of Rights." The measure would put the burden of proof on the insurance companies when there is a dispute over whether a claim is covered in a policy. The House Insurance Committee approved a version of the bill Wednesday, allowing it to move forward.

Baria said it's surprising two of his Senate bills, which he considers minimal changes, haven't made it out of committee. Senate Bill 2432 would make it mandatory for insurers to attach a list of a policyholders' rights to each homeowner's policy. Senate Bill 2165 would help homeowners who use stronger construction methods get discounts on the rates they pay.

"To me, both of those bills should be no-brainers," Baria said.

Indeed we agree with Senator Baria on SB 2432 and SB 2165; these laws should be a no brainer. Insurance impacts everyone in the state but it has impacted coastal residents in an outsized way, which in turn has greatly elevated the level of awareness these issues here. The real problem in my opinion lies with Lieutenant Governor Phil Bryant and his choices for the insurance committee, which he evidently stacked with pro insurance legislators.

Of the Senate Insurance Committee's 13 members, only three are from South Mississippi - Watson, Billy Hewes, R-Gulfport, and Debbie Dawkins, D-Pass Christian. Eugene S. Clarke, R-Hollandale, chairs the committee, which is made up of eight Republicans and five Democrats.

Most of the Legislature's post-Katrina insurance reforms aimed at coverage offered through the private sector have failed. The Legislature last year approved a bailout for the state wind pool, which is the insurance of last resort for those who can't get private wind coverage.

This is R factor is at work. How quickly Mississippi Republicans have forgotten the people who elected them to office.

sop